Mumbai: India’s main stock was trading up 1.1% on Friday, on track to post its 13th consecutive weekly gain in four years, after encouraging US economic data lifted markets across Asia.
There were bouts of profit-taking following a three-month rally and the market briefly dropped into negative territory, but quickly pulled back up again.
Private-sector lender ICICI Bank, outsourcer Infosys Technologies and engineering and construction firm Larsen & Toubro led the gains.
However, investors locked in profits in energy giant Reliance Industries, which had more than doubled in value since early March, and diversified cigarette maker ITC.
By 11:36am, the 30-share BSE index was up 1.1% at 15,172.83 points, with 24 stocks advancing.
A global rally in stocks has propelled the benchmark up 88% from a 2006 low in early March, as cash-flush foreign funds poured more than $6 billion into the market.
“The sense that I get from the people in the market is that there is a lot of cash sloshing around the world, waiting to be deployed,” Jayesh Shroff, who helps manage about $1 billion in equities at SBI Mutual Fund, said.
Expectations of investor-friendly reforms from the re-elected ruling coalition such as privatisation, easier foreign investment rules in the insurance and pension sectors and a ramp up of infrastructure spending have also boosted investor confidence.
“The underlying trend in the market is that, apart from expectations of reforms, there is a visible chance this government will last for the full five-year term and there will be continuity in policies,” Shroff said.
The benchmark is up 58% this year, making it one of the best performing markets in the world, after it slumped by more than half in 2008 when risk-wary foreign funds pulled out about $13 billion.
There are concerns valuations are expensive, but faster economic growth on increased reforms is expected to fuel corporate earnings and justify share prices, analysts said.
No. 2 IT-services firm Infosys Technologies, which gets a large part of its revenue from the Unites States, gained 3.5% to Rs1,684 on signs of easing in the US recession.
ICICI Bank climbed 2.9% to Rs755.50 on hopes a revival in economic growth will lead to lesser defaults and spark credit growth.
Larsen rose 1.5% to Rs1,478.10 on expectations it will gain from government moves to improve the country’s creaking infrastructure.
Reliance Industries, which has the most weight in the main index, fell 0.5% to Rs2,244.10, while ITC dropped 5.2% to Rs192.
In the broader section, gainers led losers 2 to 1 on relatively heavy volume of 346.4 million shares.
The 50-share NSE index was up 0.6% at 4,601.15.
Asian markets were higher on Friday after a Wall Street rally overnight. Japan’s Nikkei was up 0.9%, while MSCI’s measure of other Asian markets rose 0.8%.
Fewer US workers filed new claims for jobless benefits for a third straight week last week and productivity rose faster than expected in the first quarter, data showed on Thursday, supporting budding hopes that the recession is losing force.