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Shares close at record high as rate concerns ease

Shares close at record high as rate concerns ease
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First Published: Tue, Jul 03 2007. 04 25 PM IST
Updated: Tue, Jul 03 2007. 04 25 PM IST
Mumbai: Indian share prices closed at a new record high on Tuesday (3 July) as concerns of a hike in interest rates eased.
They said buying sentiment improved on the waning of global and local rate concerns after the US Federal Reserve kept key rates unchanged last week and Indian inflation slipped.
Maintaining its upward spree, the benchmark Sensex scaled yet another new intra-session peak at 14,790.87 points in early trade on the Bombay Stock Exchange on 3 July on heavy buying by foreign funds in stocks of construction companies.
The 30-share index, Sensex, shot up by 126.61 points at 14,790.87 in the first five minutes of trading.
Similarly, the wide-based National Stock Exchange’s Nifty rose by 39.25 points at 4,353.00.
Buying activity was more confined to construction and related company stocks like Tata Steel, ACC, and Grasim Industries.
Support also came in from major pharma company stocks.
Market observers said a bullish trend in global markets also influenced the trading sentiments here.
According to dealers share prices rose by as much as 1.03% on Tuesday (3 July) morning to a new intraday high on expectations that the RBI would keep interest rates on hold later this month.
The Sensex’s previous intraday record was 14,745.97, set on Monday (2 July).
Analysts said the market could be set to consolidate as first-quarter earnings due to be reported this month by software companies may disappoint given the pressures they are feeling from a strong rupee.
The rupee was at a near-decade high of 40.57 against the dollar from 40.6 the previous day. Software firms in India bill many of their clients in dollars and a weaker dollar hits earnings.
“We expect a disappointing first-quarter performance” from IT services, said analyst Surendra Goyal at Citigroup Global Markets in a note, citing among other factors the impact of the rupee’s sharp appreciation and wage increases.
Dealers said pressure for a further interest rate hike had eased after India’s inflation rate fell to a 14-month low of 4.03% for the week ended on 16 June.
That was comfortably within the RBI’s medium-term inflation target of 4.0 to 4.5%. Inflation had been riding close to 7% earlier in the year.
Buying interest was seen in engineering and banking stocks.
“Buying momentum pushed the markets to fresh highs as rate concerns eased but we expect volatility to increase as the markets could correct a bit,” said a dealer at brokerage Jamnadas Morarjee.
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First Published: Tue, Jul 03 2007. 04 25 PM IST
More Topics: Money Matters | Equities |