Mumbai: Indian shares climbed 1.9% on Thursday, joining strong markets across Asia after a pullback in Chinese peers lifted sentiment and boosted commodity prices.
Traders said the rise was probably a mild correction after this month’s fall, with the outlook for the economy dented by weak monsoon rains that have already hit crops and sowing operation in vast hinterlands.
Adani Power Ltd flip-flopped after a tepid market debut, suggesting high-priced initial public offers could face investor resistance. Shares in the utility, which raised $630 million in India’s first large IPO in 18 months, were trading up 0.2% at Rs100.20, after initially jumping almost 8% and then slipping below issue price.
Energy giant Reliance Industries rose 2.1% to Rs1,923.40, while and state-run explorer Oil and Natural Gas Corp advanced 2.7% to Rs1,189.25, as oil held steady above $72 a barrel on Thursday, after rising more than 4% the previous day.
Leading lender State Bank of India climbed 2.5% to Rs1,733.05, and private-sector rival ICICI Bank added 1.8% to Rs729.60.
“Today’s bounce back is only because many technical indicators show the market is in oversold territory. But the market’s consolidation is not yet over,” Alex Mathew, head of research at Geojit BNP-Paribas Financial Services, said.
By 11:37am, the 30-share BSE index was up 1.9% at 15,091.03 points, with all stocks advancing. The 50-share NSE index was up 1.9% at 4,476.85.
The benchmark has fallen 5.5% this month on increasing worries weak monsoon rains will hit crucial rural demand and pose a hurdle to economic recovery. High valuations and looming inflation has also weighed on investor confidence.
A slew of recent downbeat data has stoked doubts about the pace of a global economic recovery, adding to fears about stocks having risen ahead of fundamentals.
Chinese shares have encountered aggressive profit-taking after almost doubling this year, losing more than 20% in two weeks to fall to a two-month low, a sell-off that has reverberated across global equity markets.
On Thursday, however, Chinese shares climbed, lifting Hong Kong-listed stocks, amid signs of official support for the sliding markets including the approval of new funds.
Investors in India will await a government update on rains in past week and since 1 June. Meagre rainfall has pushed India to the brink of drought, putting pressure on food prices and energy supplies.
The wholesale price index is forecast to have fallen 1.49% in the year to 8 August, smaller than the previous week’s annual decline of 1.74% a Reuters poll of economists showed. The data is expected around noon.
In the broader Indian market, gainers led losers 2 to 1 on above-average volume of 158.9 million shares.
Asian shares were higher, with Japan’s Nikkei 1.8%, while MSCI’s measure of other Asian markets rose 1.4%.