Mumbai: Indian shares rose for a third straight session and scaled a fresh 33-month peak on Monday, propelled by robust foreign fund inflows, but closed off highs as weak European equities prompted traders to book profits.
Foreign funds have pumped $19.2 billion into Indian equities so far in 2010 and the country looks set to surpass last year’s record $17.5 billion net inflows.
India does not yet see the need to cap inflows from foreign institutional investors, finance minister Pranab Mukherjee told ET Now television channel. The 30-share BSE index rose 0.15% or 30.69 points to 20,475.73, with 16 components closing in the red.
The benchmark rose as much as 1.3% on the day and hit 20,706.74 points, its highest since January 2008, and is only around 700 points short of its all-time high. It has gained 17.2% in 2010.
“It is purely a liquidity play. With developed economies not doing great, emerging markets like India are receiving good inflow,” said Sandeep Singal, co-head of institutional equities at Emkay Global Financial Services.
“It looks like asset managers are increasing their weight for Asia-Pacific markets or emerging markets. So, enjoy the party while it lasts.”
Soaring share prices and rising risk appetite boosted inflows into global equity funds in the last week of the third quarter, keeping emerging markets funds on track for a record-setting year, fund tracker EPFR Global said last Friday.
Mahindra Satyam, earlier known as Satyam Computer Services, shed 2.4% after the outsourcer said late Friday it had received a notice from the US Securities and Exchange Commission saying the market regulator may file a civil suit alleging fraud.
Automakers rose as car sales in India raced ahead in September helped by strong economic growth, while demand in the United States, Europe and Japan stayed stuck in low gear.
“With the buoyant economy, this festival season could remain strong across the two-wheeler and passenger car segments,” Edelweiss said in a note, adding Mahindra & Mahindra and Tata Motors were its top sectoral picks.
Bajaj Auto rallied nearly 3% to an all-time high of Rs1,589.90 after the No. 2 motorcycle maker said September sales rose 26%. Tata Motors and Mahindra & Mahindra gained 1.9% and 2.5% respectively.
Energy major Reliance Industries rose 1.1%, as it played catch up with the broader market rally. The stock which has the highest weight on the Sensex, is still down 6.6% so far in 2010.
Financials closed mixed reflecting both investor optimism on loan demand outlook in an expanding economy and fear of further increase in key interest rates.
Leading private-sector lender ICICI Bank climbed 2%, while top lender State Bank of India and HDFC Bank each shed 0.2%. Mortgage lender Housing Development Finance Corp gained 2.4%.
Cigarette-to-hotel business ITC shed 1.9% after gaining nearly 3% over the two previous sessions.
Declining shares led advancing ones in a ratio of 1.1:1 on a relatively moderate volume of 488 million shares.
The 50-share NSE index gained 0.3% at 6,159.45 points.
The pan-European FTSEurofirst 300 was down 0.5% at 1028 GMT. The broader MSCI’s all-country world equity index dropped 0.2% while emerging markets index rose 0.4%.
Sun Pharmaceutical Industries firmed 1.7% to Rs2,064.30 after the drugmaker said late Friday it got tentative US FDA approval for generic Stalevo tablets.
Jaiprakash Associates rose 2.1% to Rs126.55 as the engineering and construction firm said after market hours last Friday its cement shipments in September jumped 61% from a year ago.
SKS Microfinance dropped 5.8% to Rs1,276.50, after the largest microlender said it had terminated the appointment of its chief executive.
Prime Focus gained 4.7% to Rs736.80, as the special-effects firm said it had won orders totalling $11 million for 2-dimensional to 3-dimensional stereoscopic conversion work from two Hollywood studios.