Mumbai: Indian shares climbed more than 2% on Wednesday in step with strong global markets after surprisingly strong US housing data and easing concerns about world financial markets boosted investor confidence.
Energy firm Reliance Industries, the country’s largest listed company with the biggest weight on the main index, led the gains. Private-sector lender ICICI Bank was another major market mover.
By 11:49am, the main 30-share BSE index was up 2.37% at 9,074.27 points, with 27 stocks advancing. The 50-share NSE index was up 2.3% at 2,822.30.
Analysts said the rise would be shortlived and investors would lock in profits at the next opportunity as the slowing Indian economy had not yet received any significant shot in the arm to spark widespread optimism.
“There are some positive signs, but there is still more pain in the system,” Maulik Patel, research analyst at K R Choksey, said.
The benchmark index, which snapped a three-day rally on Tuesday, is down 7.3% this year.
India’s economic growth is seen dropping below 6% to a seven-year low in 2009/10 after the global crisis hits Asia’s third-largest economy harder than expected, a quarterly Reuters poll showed.
Sluggish domestic demand, a sharp decline in exports and a widening fiscal deficit are worrying factors, traders said, with uncertainties linked to month-long national elections starting in mid-April also limiting prospects for a stocks rally.
The International Monetary Fund said on Tuesday India’s economy was slowing dramatically and uncertainty surrounding the outlook was unusually large.
Reliance Industries, which is expected to begin pumping gas from its field off India’s east coast this month, rose 3.5% to Rs1,345.30.
ICICI gained 4% to Rs337, after the Economic Times said the bank was considering spinning off its automated teller machines and point of sale terminals. A spokesman for the bank declined comment on the report.
HDFC Bank rose 4%, while state-run State Bank of India climbed about 2.5%.
In the broader section, gainers led losers in the ratio of almost 3:1, on relatively moderate volume of 132.6 million shares.
Banks helped Asian stocks extend gains. Japan’s Nikkei was up 0.3%, while MSCI’s measure of other Asian markets was up 0.7%.