Sensex nears 16-month high on robust earnings

Sensex nears 16-month high on robust earnings
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First Published: Wed, Sep 16 2009. 04 24 PM IST
Updated: Wed, Sep 16 2009. 04 24 PM IST
Mumbai: Indian shares rose 1.35% on Wednesday to their highest close in almost 16 months, as signs of a US economic recovery added to the upbeat hopes for robust quarterly earnings.
Traders said Federal Reserve chairman Ben Bernanke’s comment that the US recession was probably over was a shot in the arm for increased fund flows into riskier assets such as equities.
Foreign funds have moved over $9 billion into Indian stocks this year, with more than $700 million coming in so far this month.
Tata Steel, which owns Europe’s second-biggest steel maker Corus, was the top gainer in the main index on expectations a US recovery would boost demand.
The share jumped 8.2% - its biggest one-day rise in more than three months - to Rs531.60, its best close in a year.
“Tata Steel looks good on the recent rise in Corus’ product prices and the improvement in the unit’s operating capacity to 70% from 50% in the first quarter,” said Eric Martins, senior research analyst at Systematix Shares.
The 30-share BSE index added 1.35%, or 222.59 points, to 16,677.04 points, its highest close since 22 May, 2008, with 24 components rising. The 50-share NSE index closed 1.4% higher at 4,958.60.
The benchmark, which rose for a second day, has gained nearly 73% since the start of January.
“We are fairly valued at this point in time and caution is the word now,” said Rajen Shah, chief investment officer at Angel Broking. “We have moved up too aggressively... the market seems to be 6-7 months ahead of time.”
With blue-chip index more than doubling from its March low last week, he said the mid-cap stocks were relatively better picks.
Banks were among the big gainers after advance taxes paid by companies for the September quarter pointed to stronger profits.
State Bank of India rose 4% to Rs2,089.60 and ICICI Bank gained 3% to Rs867.55.
Metal producers Sterlite Industries firmed 3.7% to Rs771.05 while Hindalco climbed nearly 5% to Rs131.30.
In the broader market, gainers outnumbered losers in the ratio of 1.3:1 on relatively good volume of 571 million shares.
World equities rose to 11-month highs, and US stock futures pointed to a stronger opening on Wall Street.
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First Published: Wed, Sep 16 2009. 04 24 PM IST
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