Bangalore: Shares rose more than 1% on Wednesday, as hopes of stronger economic and corporate earnings growth triggered bargain hunting after the market had fallen 2.6% in November.
The manufacturing sector in Asia’s third-largest economy expanded at its fastest pace in six months in November on the back of robust new business and a sharp rise in export orders, a survey showed on Wednesday.
This came a day after data showed the Indian economy grew more than expected in the September quarter, defying weakness elsewhere.
Shares in top lender State Bank of India rose as much as 4% to Rs 3,116, leading the gains in the market on hopes that a fast-growing economy and pickup in industrial activity would boost demand for credit. Leading car maker Maruti Suzuki extended gains to be up 1.7% at Rs 1,447.60 after the Indian unit of the Japanese auto major Suzuki Motor Corp reported a 28% rise in the November vehicle sales.
The main 30-share BSE index was trading up 1% at 19,713.77 at 12:07pm, after having risen as much as 1.3% earlier, with 24 of its components advancing. The broader 50-share NSE index was up 1.1% at 5,925.65.
“The market seems to have come on track. Value seems to be returning to sectors such as real estate after their fall,” said S.P. Tulsian, an independent consultant. “I do not think there is fear of the market going down too much.”
State-run explorer ONGC was up 3.2% after its chairman said that the company’s share sale was likely to be launched in March and that the oil ministry would decide on its stock split soon.
The benchmark index is down 5.6% from a record closing high on 4 November, after corruption scandals hammered shares in sectors such as real estate and financials.
The market is, however, up about 13% so far this year bolstered by overseas portfolio investments worth a record $28.7 billion so far in 2010.
Analysts said the near-term market sentiment would continue to be influenced by the scandals that include issue of telecom licenses at low prices and a bribes-for-loans scam that saw eight financial industry executives arrested last week. The banking sector index was up 1.9%, while the real estate sector index was 2.5% higher.
In the broader market, gainers outpaced losers by a ratio of 5-to-1 on volume of about 410 million shares.
Coal India, the world’s largest coal miner, was up nearly 1% at Rs 319.60 after its chairman said the company was looking at acquiring more than a 10% stake in Australian firm Peabody’s asset.
Tata Motors was up 1.8% at Rs 1,258. The maker of commercial vehicles and passenger cars said on Wednesday its November vehicles sales rose 1% to 54,622 units.