Mumbai: Indian shares rose 2.1% on Tuesday to their highest close in five weeks, with Tata Motors leading the charge on robust sales growth in February and an improving outlook. Investor confidence was also upbeat after a three-day weekend, following last Friday’s national budget that pushed for higher consumption and fiscal consolidation.
Tata Motors, the country’s largest vehicles maker, jumped 12.1% in its biggest one-day rise in almost 10 months after its sales in February rose 58% from a year earlier.
On Friday, it had reported a rise in sales and margins at its UK-based Jaguar Land Rover unit as luxury buyers returned after the global crisis.
The 30-share BSE index posted its best one-day%age gain in 2010 as it climbed 2.09%, or 343.01 points, to 16,772.56, its highest close since 25 January. Twenty-five of its components advanced. The 50-share NSE index rose 1.9% to 5,017, its best close since 22 January.
“Auto sales numbers helped the gains. The mood was positive as people understood the budget with more clarity,” Manish Sonthalia, fund manager for portfolio management services at Motilal Oswal.
On Friday, Finance Minister Pranab Mukherjee announced plans to hike spending on social and agricultural programmes popular among voters, and adjusted taxes to put more money in the hands of the middle class.
India’s manufacturing industry in February grew at its fastest pace in 20 months, expanding for the third month thanks to expanding output and new orders, a survey showed.
“Until something disastrous happens on the global front, there does not seem much of downside for Indian market in the near term. Things should get better,” said Sonthalia.
Tata Motors ended at Rs797.10, its best close in six weeks.
“The pace of improvement in JLR’s volumes and profitability in 3Q was much higher than what we were expecting and we expect this to sustain in FY11,” CLSA analysts Abhijit Naik and Alok Rawat said in a note and raised the stock to “buy” from “outperformer”.
Maruti Suzuki, India’s leading car maker, climbed 1.8% to Rs1,489.65 after its sales in February rose 22%.
Top utility vehicle maker Mahindra and Mahindra gained 4.7% to Rs1,054.50, as its February sales rose 40%.
Financials rose as investors placed bets on their long-term prospects in an advancing economy.
State Bank of India gained 0.6% while smaller rivals ICICI Bank and HDFC Bank rose 2.9% and 2.4% respectively.
Reliance Industries, which has the heaviest weight on the main index, gained 0.6% to 983.60 rupees as hopes faded for its bid for bankrupt LyondellBasell.
LyondellBasell has rejected Reliance’s offer that values the chemicals maker at $14.5 billion, Bloomberg reported citing unnamed sources, a decision that could push the Indian firm to focus on other overseas targets.
“While LB did offer strategic merit for RIL, we believe the bid not going through is a better outcome, as it saves RIL from getting drawn into a bidding war and thus potentially over-paying for the assets,” Goldman Sachs said in a note.
In the broader market, gainers outnumbered losers in a ratio of 2.7:1, with 318 million shares changing hands on the BSE, higher than last week’s daily average of 291 million shares.