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Markets rise 1.7% on economic boost, IOC surges

Markets rise 1.7% on economic boost, IOC surges
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First Published: Wed, Dec 01 2010. 10 21 PM IST
Updated: Wed, Dec 01 2010. 10 21 PM IST
Mumbai: Indian shares rose 1.7% on Wednesday to their best close in nearly two weeks as hopes of strong 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 state-run Indian Oil Corp (IOC.BO) rose as much as 14% during the day, after its chairman said the fuel retailer would sell shares in January at a 30% premium to its close on Tuesday.
The main 30-share BSE index ended up 1.68% at 19,850 points, after having risen as much as 1.9% earlier, with 24 of its components advancing.
“The comfort has been provided by the strong economic data and people are now buying in anticipation of strong earnings growth next month,” said K.K. Mital, head of portfolio management services at Globe Capital.
He said the buying sentiment should continue in the near term unless there was any negative news on euro zone debt. “Local developments also need to be watched out for,” Mital said.
The benchmark index is down 5% from a record closing high on Nov. 4, after corruption scandals hammered shares in sectors such as real estate and financials.
Analysts said the near-term market sentiment would continue to be influenced by the scandals that include the issue of telecom licenses at low prices and a bribes-for-loans scam that saw eight financial industry executives arrested last week.
The market is, however, up nearly 14% so far this year bolstered by overseas portfolio investments worth a record $28.7 billion in 2010.
IOC closed 11% higher at Rs 384.10. Its chairman said the company aims to raise $4.4 billion in January through a follow-on share sale and that the pricing for offer was likely to be at Rs 450 apiece.
The government is selling a 10% stake, while the company will offer an equal number of new shares to raise Rs2000 crore, making the sale the biggest-ever share offering in the Indian market.
Shares in top lender State Bank of India rose 3.7% to Rs 3,105.10 and No. 2 ICICI Bank gained 2% to 1,166.95 rupees on hopes that a fast-growing economy and pickup in industrial activity would boost demand for credit. The banking sector index rose nearly 3% and the real estate sector index closed up 3%.
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.
Explorer ONGC surged 3.2% to Rs 1,288.50 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.
In the broader market, gainers outpaced losers by a ratio of 4 to 1 on volume of about 640 million shares.
The broader 50-share NSE index ended up 1.67% at 5,960.90.
STOCKS
Coal India (COAL.BO), the world’s largest coal miner, ended up 1.3% at Rs 320.70, after its chairman said the firm was looking at acquiring more than a 10% stake in Australian firm Peabody’s asset.
Strides Arcolab (STAR.BO) gained 5.4% to Rs 411.65 after the drugmaker said it had got US FDA approval of midazolam hydrochloride injection used for anaesthesia in case of sedation, anxiolysis and amnesia.
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First Published: Wed, Dec 01 2010. 10 21 PM IST
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