New Delhi: Markets rose 1% on Wednesday, taking cues from firmer Asian peers and led by energy major Reliance Industries and lenders HDFC Bank and ICICI Bank .
Cement and construction firm Jaiprakash Associates jumped 6% on a newspaper report it was in talks to sell up to 26% stake in its cement business to Mexico’s Cemex and South America’s Votorantim Group.
A spokesman for Jaiprakash Associates said he did not have an immediate comment.
At 11:49am, the benchmark 30-share BSE index was trading up 1% at 17,032.99 points, with 23 of its components in the positive territory.
Reliance Industries, which has the heaviest weight on the main index, climbed for a second day on expectations the energy major will be able to step up flagging gas output off the country’s east coast.
The stock was trading up 1.25% at Rs 831.80
A. Balasubramanian, chief investment officer at Birla Sunlife, said investors were realising beaten-down Indian shares, which are among the biggest losers this year, were attractive bets in a gloomy global environment.
Foreign funds have bought shares worth $449 million this month after selling about $2 billio n in August.
Still, the outlook remained cloudy.
“Nothing has changed fundamentally for India in the past few days. It’s just a pullback rally,” Deven Choksey, managing director at K. R. Choksey, said.
Top lender State Bank of India and rivals ICICI and HDFC Bank were up between 1% and 2.5%.
“There is a talk that banks may gain weightage on MSCI indices. There is also a feeling that market has already factored in another 25 bps rate hike,” said Ambareesh Baliga, COO at brokerage Way2Wealth.
He said a higher weightage would prompt investors tracking MSCI indices to rebalance their portfolio and lead to more trading in these shares.
The 50-share NSE index was up 1.09%. In the broader market, there were four gainers for every declining stock on a total volume of about 310 million shares.
Arun Kejriwal, strategist at research firm KRIS, said if Europe opened lower the market could turn lower.
Most car makers were trading down with BSE auto index losing about 0.35%. Tata Motors fell as much as 1.25% after UBS cut its target price to Rs 770 from Rs 920 and reiterated its ‘sell´ on the stock.
Software services bellwether Infosys dropped about one%, highlighting concerns about the risk European debt crisis posed to India’s showcase $76-billion IT industry.
The BSE index, which is down more than 17% this year, as rising interest rates and worries about the health of global economy led investors to pare exposure to risky assets.
Morgan Stanley had earlier this month pared its growth forecast for India to 7.2% in 2011/12 from 7.7% earlier.
At 11:22am, the MSCI’s measure of Asian markets other than Japan was up 2.34%, while Japan’s Nikkei gained 1.91%.
Wall Street fell for a third day on Tuesday on fears Europe still has failed to tackle its debt crisis, prompting worries the market is headed to new lows for the year.
Shree Renuka Sugars , Bajaj Hindusthan , Balrampur Chini Mills and Simbhaoli Sugars rose 4-6% after global sugar prices rose to a 3-1/2-month high on Tuesday.
Syndicate Bank rose about 3% after a newspaper report said Aviva Life Insurance Company India, a local arm of the UK insurer Aviva , may sell as much as 30% stake to the state-run Indian bank.
Kalindee Rail Nirman Engineers Ltd rose about 8% after it received contract for about $15 million from Bangladesh Railway.