Mumbai: Indian shares rose 3.1% on Tuesday to their highest close in 10 months as investors shrugged off weak regional bias and grabbed the opportunity to enter the market that had fallen 2.9% the previous day.
Traders said foreign portfolio investors, who have pumped in more than $6.5 billion since mid-March, were big buyers in anticipation of speedier reforms by the government to boost growth, after the market had started shakily.
Energy giant Reliance Industries led the gains as oil prices rose above $69 a barrel. Engineering and construction firm Larsen & Toubro firmed after Prime Minister
Manmohan Singh said India has scope for increasing public spending, particularly on upgrading infrastructure.
“Yesterday we saw a lot of domestic funds selling shares, but today, foreign funds are buying into the market after the fall,” T S Harihar, vice president at ICICI Securities, said.
“Even if they enter the market at these levels, they can see decent returns over the next few years. They are comfortable with that.”
Leading lender State Bank of India and ICICI Bank were also among the major gainers on hopes an economic revival in the latter half of the year will boost loan growth and result in fewer defaults.
Satyam Computer Services jumped 10%, its daily limit, after reporting financial results for the first time since being rocked by an accounting scandal and subsequently taken over by Tech Mahindra Ltd.
The 30-share BSE index .BSESN ended up 3.14%, or 461.08 points, at 15,127, its best close since last 12 August was the index’s biggest one-day percentage rise in two weeks and came after falling as much as 0.95% in early deals. The 50-share NSE index .NSEI rose 2.7% to 4,550.95.
Twenty-eight stocks advanced while in the broader section, gainers led losers 1,498 to 1,293 on relatively heavy volume of 600.4 million shares.
The benchmark had fallen 2.9% on Monday in its biggest drop in almost six weeks as investors took profits after a near 90% rally over the past three months.
Analysts said profit-taking would be sporadic as underlying sentiment was positive on hopes the government will unveil market-friendly measures in the budget in early July to boost growth.
The government can raise funds through selling up to 49% of state-run firms, the deputy chairman of the Planning Commission said on Monday, adding the economic outlook had improved over the past three months.
“The money that is lying on the sidelines is coming in whenever there is a correction. This will continue in the near term,” Ambareesh Baliga, vice president at Karvy Stock Broking, said.
The benchmark is up 57% this year, mainly fuelled by over $6.5 billion in investments from foreign funds since mid-March, after slumping by more than half last year when foreign investors withdrew $13 billion.
Satyam, once India’s no. 4 outsourcer, rose Rs6.05 to Rs66.85, while Tech Mahindra soared by more than a quarter to Rs744.20.
Reliance Industries, which has the most weight in the main index, advanced 3.8% to Rs2,271.90. Larsen rose 6.4% to Rs1,573.80, with investors betting the company will receive more orders as the government steps up spending to improve the country’s ramshackle infrastructure.
Government-run State Bank of India, the country’s top lender, rose 4% to Rs1,763.30, while private-sector rival ICICI Bank ended up 1.6% at Rs735.55.
Top realty firm DLF Ltd jumped 10.1% to Rs402.70, a day after a senior official told Reuters the firm saw signs of recovery in the beaten down residential property sector and expected prices to start climbing.
Most other Asian markets fell on Tuesday, with Japan’s Nikkei sliding 0.8%, while MSCI’s measure of other Asian markets also dropped 0.8%.