Mumbai: Indian shares rose the most in nearly 10 months to close 3.4% higher on Monday, as global stocks cheered the bumper $1 trillion rescue package to keep Greece’s debt crisis from spreading through the euro zone.
Reliance Industries, which had won a legal battle in Supreme Court last Friday on gas price and financials led the rally.
The rescue plan, chalked out by European Union finance ministers, central bankers, and the International Monetary Fund over the weekend, was the largest package in over two years since G-20 leaders threw money at the global economy following the collapse of Lehman Brothers.
Graphic: Yogesh Kumar / Mint
The 30-share BSE index rose 3.35%, its biggest percentage point gain since July 17, 2009, or 561.44 points to 17,330.55. Twenty-eight of its components advanced.
The benchmark last week slid 4.5%, its biggest weekly fall in six months.
“It (the euro zone rescue package) is of double benefit for the Indian market. The immediate concern relating to the various European economies has been addressed,” said V P Chaturvedi, managing director of Tata Asset Management.
“Secondly, this leads to a situation where interest rates in Europe may stay low for a while. This will help the money flow to emerging markets like India.”
Foreign funds have pumped around $6.2 billion into Indian equities so far in 2010, after investing a record $17.5 billion in 2009.
Top-listed firm Reliance Industries, which has the heaviest weight on the Sensex, rose 4.48%, its biggest single day gain in more than six months to 1,080.20 rupees. It had risen 2.3% last Friday.
The company, controlled by billionaire Mukesh Ambani, won the backing of the apex court in a dispute over gas prices against Reliance Natural Resources that is controlled by estranged younger brother Anil Ambani.
Reliance Natural shed a further 4.9% after tumbling 23% last Friday.
Financials marched ahead on promising long-term outlook in an economy expected to expand at least 8% in 2010-11.
Industrial output in March, data for which is due on Wednesday, is expected to show a robust 15 percent annual rise, a Reuters poll showed.
Top lender State Bank of India climbed 3.6%, while rivals ICICI Bank and HDFC Bank rose 5.1% and 4.7% respectively.
Mortgage lender Housing Development Finance Corp gained 2.3%.
Metals makers advanced as base metal prices rebounded strongly in Shanghai and London.
Non-ferrous metals maker Sterlite Industries and Hindalco climbed 5.8% and 7.7% respectively.
Tata Steel, the world’s eighth-largest steel maker by output, rose 7.7%.
Drug maker Cipla bucked the trend, and tumbled 6.4% as its March quarter net profit came below street estimates.
In the broader market, advancing shares outnumbered declining ones in a ratio of 3.6:1, on a volume of 378 million shares, lower than that in the previous session.
The 50-share NSE index climbed 3.5% to 5,193.60 points.