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Sensex snaps three-day losing streak, gains 1%

Sensex snaps three-day losing streak, gains 1%
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First Published: Wed, Jul 13 2011. 11 34 PM IST
Updated: Wed, Jul 13 2011. 11 34 PM IST
Mumbai: Indian shares snapped a three-session losing streak and rebounded 1% Wednesday as investors returned to risky assets after China’s economic growth data allayed some concerns over a global slowdown even as euro zone debt worries lingered.
Financials contributed the most to the gains on the BSE main index. The banking sector index advanced 1.1%, but is still down 5.5% in 2011, hurt by rising interest rates.
The 30-share Sensex climbed 184.40 points to 18,596.02, with 26 components closing in the green. It had declined 3.5% over the past three sessions.
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The 50-share National Stock Exchange (NSE) index gained 1.1% to 5,585,45.
“For the moment, money is flowing into emerging markets like ours, when other options seem to have dried up for FIIs (foreign institutional investors),” said Gajendra Nagpal, CEO of Unicon Financial Intermediaries Pvt. Ltd.
Foreign funds have bought shares worth $2.6 billion over 13 sessions to Monday as global appetite for emerging markets revived. “But then, if globally things turn really worse, the overall risk appetite would come down sharply and we could be hit,” said Nagpal.
Also, there was less conviction in the rally as persistently high domestic inflation and a slowdown in economic growth in Asia’s third largest economy weighed.
India’s factory output in May expanded at its slowest pace in nine months, data on Tuesday showed, even as the country braces itself for another rate increase this month to douse inflation pressures.
China’s annual gross domestic product grew 9.5% in the second quarter of 2011, above a forecast by a Reuters poll, despite a spate of monetary tightening measures from Beijing.
“We tend to rise on somebody else’s good news, and then fall because we lack the strength,” said Arun Kejriwal, director of research firm KRIS. “The issues in India are grave enough. Investors need to be cautious. Also, earnings season had a bad start with Infosys failing to impress,” he said.
Infosys Ltd extended Tuesday’s 4.4% decline and slid further by 0.5% to Rs 2,777.30, after the bellwether missed quarterly earnings expectations and warned it faces a volatile global economy and a possible slowdown in client spending.
Goldman Sachs Group Inc. has cut its 12-month target price on Infosys to Rs 3,330 from Rs 3,520 earlier. It maintained its “buy” rating on the stock.
Tata Consultancy Services Ltd, which reports earnings on Thursday, gained 0.3%. Wipro Ltd dropped 0.3%.
Sugar makers rallied as world sugar prices shot up. Shree Renuka Sugars Ltd, Dhampur Sugar Mills Ltd and Balrampur Chini Mills Ltd rose between 3.7% and 4%. White sugar futures hit a record peak on Tuesday and raw sugar jumped more than 5% as fears of a shrinking cane crop from the world’s largest producer Brazil spurred investor buying.
State Bank of India, ICICI Bank Ltd and HDFC Bank Ltd firmed between 0.7% and 1.6%.
Around 496 million shares changed hands on NSE, lower than the 90-day daily average volume of 580 million shares.
The market breadth was positive with more than three shares advancing for every share that declined.
Glenmark Pharmaceuticals Ltd rose 3.5% to Rs 324.65 after its US generics unit received the Food and Drug Administration’s approval for ursodiol tablets used to treat swelling of the bile ducts. Dr. Reddy’s Laboratories Ltd climbed 3.4% to Rs 1,595.80 after the drug maker said it received the US drug regulator’s approval for generic version of synthetic anti-coagulant injection, fondaparinux sodium.
Graphic by Paras Jain/Mint
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First Published: Wed, Jul 13 2011. 11 34 PM IST
More Topics: Markets Update | BSE | NSE | Sensex | India |