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Markets gain 1.7% on recovery hopes

Markets gain 1.7% on recovery hopes
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First Published: Thu, Jun 03 2010. 04 26 PM IST
Updated: Thu, Jun 03 2010. 04 26 PM IST
Mumbai: Indian shares rose 1.7% on Thursday to their best close in three weeks as solid US home sales data rekindled hopes the global economic recovery was on track and boosted stock markets worldwide.
Energy major Reliance Industries, engineering and construction firm Larsen and Toubro and No. 2 software-services firm Infosys Technologies led the main index higher, its second consecutive rise.
No. 2 telecoms firm Reliance Communications rose 6.4% to Rs164.45, after the Economic Times newspaper said the Anil Ambani-controlled firm is considering a merger with South Africa’s MTN or roping in a strategic foreign investor to raise funds.
More than 8 million shares of the company traded on Thursday, compared with their 30-day average trading volume of 1.5 million. On Wednesday, the shares had jumped 11% on hefty volume. The 50-share NSE index rose 1.8% to 5,110.50 points.
Abu Dhabi’s Etisalat said on Wednesday it was looking to buy a stake in an Indian mobile operator, but did not disclose any names. A newspaper had reported the company was in talks with cash-hungry Reliance Communications for a $3.8 billion deal.
“Stocks are attractive at these levels, so liquidity has started flowing in,” Avinash Gupta, assistant vice president of research at Bonanza Portfolio, said.
But he cautioned that debt problems in the euro zone and the risk of monetary policy tightening due to high domestic inflation would keep markets from rising significantly in coming weeks.
The 30-share BSE index ended up 1.68%, or 280.49 points, at 17,022.33, its best close since 13 May, and the best single-day%age gain since 26 May. The 50-share NSE index rose 1.8% to 5,110.50 points.
All stocks advanced in the main index, which rose nearly 2% during trade.
The benchmark had slid 4% this year through Wednesday, having posted its first monthly decline since January in May as investors pared their exposure to risky assets in the wake of Europe’s sovereign debt crisis.
“Though we cannot say that the entire scenario has changed until the euro zone debt crisis has been resolved, funds which had earlier booked profits are now re-entering the market as they think the prices are cheap,” Alex Mathews, head of research at Geojit BNP Paribas Financial Services, said.
“They are being opportunistic and may continue to buy into the market in the short term,” he said.
On Wednesday, surprisingly strong US housing data for April drove optimism about the world’s largest economy, boosted stocks overseas and drove up oil prices. The stock rally also eased concerns that Europe’s debt woes could restrain a fragile economic recovery.
On Thursday, Reliance Industries, India’s largest-listed firm with the most weight in the main index, rose 1.9% to Rs1,031.15.
Larsen and Toubro gained 1.9% to Rs1,660.70, while Infosys Technologies climbed 2% to Rs2,697.
In the broader market, gainers led losers by 2 to 1 on below-average volume of 322.6 million shares.
Other Asian shares also gained, with Japan’s Nikkei rising 3.2%, while MSCI’s measure of other Asian markets climbed 2.9%.
At 1016 GMT, the pan-European FTSEurofirst 300 index of top shares was up 1.7%.
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First Published: Thu, Jun 03 2010. 04 26 PM IST
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