New Delhi: Indian shares rose 1.6% on Thursday, led by gains in banks and software services, but investors were circumspect following an escalation of violence in Egypt that could trigger risk aversion.
With the market having fallen more than 10% since the start of the year there has been some bargain hunting, and traders said the government’s annual budget at the end of February would set the direction for the market.
Top telecom firm Bharti Airtel climbed 3%, extending the previous day’s gains as some analysts were optimistic about its future earnings growth after it posted a bigger-than-expected 41% drop in quarterly profit.
Rival Reliance Communications was up 1%.
K.K. Mital, head of portfolio management services at Globe Capital, said there was hope the budget would unveil a “positive roadmap” to contain inflation and fiscal management.
“One can move forward based on policy,” he said referring to the budget. “The market has already corrected some 11%... valuations have already corrected. We are trading below the long-term average.”
By 12:37 am, the Bombay Stock Exchange (BSE) 30-share index Sensex was up 1.80% at 18,415.59 points, with all its components gaining.
The index started marginally up and turned negative before rebounding.
The index is down more than 10% in 2011, hit by foreign fund outflows of $1.5 billion, after rising 17% last year.
India is battling soaring price rises that have prompted the Reserve Bank of India (RBI) to raise key rates seven times since last March. A series of scams have also been a headache for the government.
Central Bureau of Investigation (CBI) on Wednesday arrested a former telecom minister over an alleged telecom licence scam, which is seen as a move to repair the government’s image, but also a huge blow for Prime Minister Manmohan Singh and efforts to pass bills in the parliamentary budget session.
Software bellwether Infosys Technologies led the gains rising 1.8% to Rs3,139.50. Larger rival Tata Consultancy was up 1.1% at Rs1,192.30 and the sector index gained 1.3%.
Business activity in India’s services sector grew at a faster clip in January than in the previous month, boosted by new orders and expectations of solid growth, but costs also soared, a survey showed on Thursday.
India’s software and services exports are seen rising 16-18% in the year to March 2012, an industry body said on Wednesday, as demand from Western clients is expected to remain strong. Export revenue for the year to March is also seen higher than the body’s earlier forecast.
Leading lenders State Bank of India and ICICI Bank were up 1.4% and 2% respectively, ahead of weekly food and fuel inflation due around noon 12:00 pm.
In the broader market, there were 1,502 gainers compared with 910 losers on volume of about 96 million shares.
The National Stock Exchange (NSE) 50-share index Nifty gained 1.56% to 5,516.50.