Mumbai: Markets extended gains to 1% on Tuesday tracking firm Asian markets, with investors awaiting domestic economic growth data for the March quarter to provide further cues. Financials led the gains.
At 10:55am, the 30-share BSE index was up 0.99% at 18,412.14 points, with 23 components advancing. The 50-share NSE index was trading 1.07% higher at 5,531.70 points.
Banking stocks led by HDFC Bank were top contributors to the gains in the main index. Leading lenders State Bank of India and ICICI Bank rose 1.3 and 0.86%, respectively. HDFC rose 2% to Rs 2,354.
The economy probably grew an annual 8.2% in the March quarter, the median forecast from a poll of 28 economists showed.
“There are two reasons for the market going up today. One is that markets are clearly oversold and the other that inflation will likely peak and come under control,” Gajendra Nagpal, chief executive at Unicon Financial Intermediaries said.
The Reserve Bank of India this month raised rates by a higher-than-forecast 50 basis points and said it was willing to sacrifice a bit of growth to tame inflation.
India’s headline inflation eased to 8.66% in April, but upward revisions to past readings and the prospect of higher energy prices will keep pressure on the central bank to raise interest rates in June.
Reliance Communications fell as much as 2.2% to Rs 85.60 after India’s No.2 mobile carrier by users posted a sharper-than-forecast 86% drop in fourth-quarter profits on higher depreciation and interest expenses.
State explorer Oil & Natural Gas Corp recouped losses and rose as much as 1.13%. Shares of the company fell as much as 2.5% to Rs 270.45 in early trade after the company posted a 26% fall in fourth-quarter net profit, as a rise in its share of the oil subsidy burden offset higher oil and gas prices.
Nagpal also said a correction in commodity prices may provide a respite to the local market.
“Commodities are also expected to remain soft,” he said.
Brent rose above $115 a barrel on Tuesday, but oil remained on track for a fall in May, snapping a record eight-month winning streak.
Brent is set to fall more than 8% in May, the first monthly decline since August and the biggest in a year.
The main 30-share BSE index was up 0.85% at 18,385 points by 10.30am, with 24 of its components advancing.
The market has fallen nearly 5% so far this month.
The 50-share NSE Index rose 0.92% to 5,523.25 points. In the broader market 965 gainers led 322 losers on volume of 149 million shares.
The MSCI’s measure of Asian markets other than Japan was trading up 1.25% by 0500 GMT, while Japan’s Nikkei was up 1.63%.
Engineering and construction firm Punj Lloyd rose more than 10% after the company reported a net profit of Rs 176.5 million for the fourth quarter against a net loss of Rs 301 crore in the year ago .
Tata Communications rose as much as 1.2% after its chief executive said on Monday the company will likely post a profit before tax by the end of this year.