Mumbai: Indian shares snapped a two-day fall and rallied 2.6% on Thursday to their highest close in almost six weeks as a spate of strong quarterly results boosted the outlook for corporate earnings, while data reinforced improving economic activity.
Pacy global equity markets also bolstered investor confidence and fuelled appetite for risk.
Maruti Suzuki shot to a record high after the top car maker reported a 25% jump in quarterly profit, against expectations for a drop, as it rode on higher sales and lower raw material costs.
Cement maker ACC Ltd, diversified cigarette maker ITC Ltd and biotech firm Biocon Ltd all reported solid quarterly results, drawing investors.
Energy giant Reliance Industries, due to report results on Friday, and outsourcer Infosys Technologies, which reported better-than-expected quarterly profit earlier this month, were among the other major gainers.
“Overall there is a buoyancy in markets, and India is better off than most of the other markets,” V.K. Sharma, head of research at Anagram Stock Broking, said.
“As long as this momentum continues, it will be good for the Indian market.”
The index for six infrastructure industries - crude oil, refining, coal, electricity, cement and steel - together grew at an annual an annual rate of 6.5% in June, the fastest pace in 18 months and quicker than the previous month’s rise of 2.8%, data showed on Thursday.
Wholesale prices fell for the sixth straight week, bolstering expectations the central bank will hold rates steady at next week’s policy review.
But investors in top mobile operator Bharti Airtel were spooked by the drop in a key measure of growth, even though the company posted a forecast-beating 24% jump in quarterly profit.
Average revenue per user fell 20.6% as Bharti got more than half of its new users from rural areas, where spending was less than in urban centres. The stock fell 1.1% to Rs813.90 after initially rising as much as 4%.
The company’s margins were also being pressured by higher marketing expenses in the face of new competition and more infrastructure spending associated with its expansion into new markets, traders said.
The 30-share BSE index ended up 2.61%, or 387.92 points, at 15,231.04, with 28 stocks advancing, after rising as much as 2.8% at one stage. It was the best close since 12 June.
The benchmark had shed 2.3% over the past two sessions, after rising 13.4% over the previous five sessions.
“Most of the corporate earnings that have come out till now have been a positive surprise for the market, so sentiment is up,” Deven Choksey, chief executive of K.R. Choksey Shares & Securities, said.
Global equity markets have been rallying as low interest rates and hundreds of billions of dollars in stimulus spending by governments appears to be putting the world economy on the road to recovery.
The BSE index has leapt almost 90% from a 2009 low in early March, and is up 58% this year after slumping by more than half in 2008.
Concerns the market was getting expensive have been tempered by the prospect of the economy rebounding in the latter half of 2009 and corporate earnings growth picking up pace.
Indian shares may gain 15 to 25% in the next 12 months backed by earning upgrades and signs of healing in the global economy, David Pezarkar, head of equity at Shinsei’s Indian mutual fund unit said.
“Small corrections apart, I would say market continues in the upward trajectory,” said Pezarkar, whose firm will launch its first equity fund in India next week.
No. 2 IT-services Infosys gained 2.1% to Rs1,959.85 while Reliance, India’s biggest listed firm with the most weight in the main index, advanced 3.1% to Rs2,038.15.
Maruti Suzuki raced 6.4% to Rs1,295.55 after hitting a record 1,305.50, ITC added 5.6% to Rs229.95, ACC climbed 5.8% to Rs854.65 and Biocon ended up 3.2% at Rs219.05.
Sun Pharmaceutical Industries Ltd fell 7.7% early following reports of a clutch of class action suits filed against its US unit Caraco Pharmaceutical, but later erased the losses and ended up 1.6 percent at Rs1,274.10.
In the broader market, gainers led losers by more than 2 to 1 on above-average volume of 458.5 million shares.
The 50-share NSE index rose 2.8% to 4,523.75.
Asian shares were higher, with Japan’s Nikkei rising 0.7%, while MSCI’s measure of other Asian markets gained 1.2%.
At 1021 GMT, the FTSEurofirst 300 index of top European shares was up 0.1%.