Close: Sensex recovers by 1% on fresh buying

Close: Sensex recovers by 1% on fresh buying
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First Published: Fri, May 22 2009. 05 05 PM IST
Updated: Fri, May 22 2009. 05 05 PM IST
New Delhi: Indian shares rose 1.1% on Friday and took gains for the week to 14.1%, their most in 17 years, buoyed by hopes for pro-market reforms after the ruling coalition won general election last weekend.
Manmohan Singh is set to be sworn in later in the day as the prime minister for a second term, along with his new cabinet and the outlook for the market would depend on how quickly they are able to push asset sales in state firms, ease rules for foreign investment and boost sagging growth.
Some analysts believe the market is overbought after it leapt more than 17% at the start of the week following the unexpectedly easy election win. The BSE index has risen 73% from a 2009 low in early March and has climbed for 11 weeks in a row in the longest winning streak in four years.
“Valuations have become high, but people are buying because they may be left out otherwise,” D D Sharma, vice president at Anand Rathi Securities, said.
The BSE index ended up 150.61 points at 13,887.15, with gainers and losers evenly matched. Trading was choppy with the index falling 0.9% at one stage.
Brokerages and investment houses polled by Reuters expected the benchmark to reach 15,750 by the end of December, gaining another 13%.
“There are so many desperate buyers because nobody is betting on the market going down. You will see people buying at every dip from now,” Sharma said.
Energy giant Reliance Industries, private-sector lender ICICI Bank and infrastructure firm Larsen & Toubro led the market higher after a lower start.
Reliance, which has the biggest weight in the main index, rose 3.1% to Rs2,183.10, while private-sector lender ICICI gained 4.5% to Rs702.80. Larsen & Toubro climbed 4.7% to Rs1,301.40.
The market has largely been powered by foreign funds, which have pumped about $5 billion into the market in the past two months, including more than $1 billion in this week.
Outsourcers Tata Consultancy and Wipro, which get most of their revenue from overseas, fell about 2% as the rupee climbed past 47 to a dollar to its highest since December.
The rupee is set to extend its gains in the remainder of 2009 after rising sharply this week following the ruling Congress-led coalition’s decisive victory in the elections, a Reuters poll showed.
Asian shares eased after a drop on Wall Street overnight on fears the United States, with its increasing budget deficit and weakened economy, could lose its AAA rating.
Japan’s Nikkei dropped 0.4%, while MSCI’s measure of other Asian markets edged down 0.02%.
European shares were higher after falling more than 2% in the previous session. The FTSEurofirst 300 index of top European shares was up 0.4% at 4:47pm.
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First Published: Fri, May 22 2009. 05 05 PM IST
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