Mumbai: Shares edged up on Thursday, marking a third consecutive session of gains that pushed indexes to their highest close in two years, as expectations for better-than-expected quarterly earnings lifted technology stocks such as Infosys Ltd.
Shares have started 2013 on a strong note as investors bet the central bank will cut interest rates later this month, and as the resolution to the so-called US “fiscal cliff” negotiations have benefited global markets.
Foreign investors have also bought a net Rs.1,925 crore in equities this year, according to provisional exchange and regulatory data, after buying a net $24.37 billion last year.
However, analysts say 2013 would be a lot different from 2012, which saw a 25.7% gain in the benchmark index, as budget problems in the US are far from over, while at home the fiscal deficit poses a challenge for a meaningful reduction in interest rates.
“Market is in a wait-and-watch mode because US problems are just postponed and not solved as discussion regarding debt limit will come back,” said Jagannadham Thunuguntla, head of Research at SMC Investments and Advisors. Earnings growth in 2013 will largely depend on the central bank’s stance on rates and government policy measures, he added.
The benchmark BSE index rose 0.26%, or 50.54 points, to end at 19,764.78, marking its highest close since 6 January 2011.
The broader NSE index rose 0.27%, or 16.25 points, to end at 6,009.50, its highest close since 6 January 2011, and ending above the psychologically key level of 6,000 points.
Indian companies are due to start reporting earnings next week, with Infosys Ltd kicking off on 11 January. Hopes that software service exporters would report solid earnings were amplified by expectations an agreement on the US fiscal cliff would improve demand from the key US market.
Jet Airways (India) Ltd gained 4.7% after a Indian government official familiar with the matter told reporters the carrier was the front-runner for an investment from Etihad Airways. Jet later confirmed it was in talks with Etihad, in the first confirmation of a potential deal by either side.
SpiceJet Ltd gained 1% on hopes the carrier would also eventually attract foreign investment, but Kingfisher Airlines Ltd fell 2.3%.
Dr. Reddy’s Laboratories Ltd gained 2.4% after the company said it has launched prostate drug finasteride tablets in the US.
Shares in gold loan providers rallied after a central bank report proposed increasing the loan-to-value ratio to 75% from 60% currently.
Muthoot Finance Ltd shares ended up 9.7%, while Manappuram Finance Ltd closed 20% higher at the maximum daily limit.
However, shares in Titan Industries Ltd, which makes gold jewellery, ended down 1.75% on concerns over rising costs after the government said it will make importing gold costlier.
Shares in India’s biggest domestic iron ore producer, state-run NMDC Ltd, fell 3.22% after reducing prices for its most common grade by almost 6% a tonne in January, an unexpected move that will help cut the costs of steel makers who rely on imports. Reuters