New Delhi: Shares gained more than 1% on Monday, with index heavyweight Infosys Ltd leading the gains, as investors hoped the euro zone debt crisis will be contained, and a possible pause in interest rate hikes will provide growth momentum.
Asian stocks also rose on hopes that new leaders in Italy and Greece will take decisive action to save their indebted nations from bankruptcy and fend off a wider financial meltdown in the euro zone.
The main 30-share BSE index was up 0.83% at 17,335.87 points at 10:42 am, with 22 of its components in the green.
“The global markets have gone up by the end of the week due to some settlement happening on the political side as far as the European Union is concerned. That is why Indian shares have also started moving up,” said Deven Choksey, managing director at KR Choksey Shares & Securities.
The Mumbai-based analyst said investments from foreign institutional investors should be the biggest driver for Indian shares going forward.
Export-driven software stocks rose, contributing the most to the index, as stability in Europe, their second biggest market, is expected to aid deal flow.
Infosys, which has the second highest weightage on the benchmark index after Reliance Industries, and market leader Tata Consultancy both gained 2% each, while smaller rival Wipro rose 1.5%.
Investors also hoped stubborn inflation, a headache for the government, will ease as state-run retailers may cut gasoline prices from 16 November, the first cut in nearly three years and the first in the 18 months since the government ended controls.
Wholesale price inflation probably slowed only a tad to 9.61% in October from 9.72% the month before, as tighter monetary policy had little effect on high food and energy prices, a Reuters poll showed.
The Reserve Bank of India raised interest rates last month for the 13th and possibly final time in a tightening cycle that began early 2010 on expectations that persistently high inflation will finally begin to ease starting in December. Banking shares, which have suffered recently on asset quality concerns, recovered slightly. The country’s No. 3 lender HDFC Bank rose 2.3%, while ICICI Bank, the top private sector lender, gained 0.80%.
Shares in state-run Coal India, the world’s largest coal miner, fell nearly 1% after it posted lower-than-expected quarterly net profit as a price increase in February failed to boost profitability despite higher-than-expected sales.
Shares in cash-strapped Kingfisher Airlines rose more than 7% after reports the carrier would consider proposals, including selling property, to cut its $1.3 billion debt by more than half.
The stock has lost 70% of its value so far this year and fell close to 10% on Friday, as investors bailed out, alarmed by scores of flight cancellations and reports that its leasing firms wanted their planes back.
Indian shares have fallen 15% so far this year, including a 2.1% drop last week, making the market one of the worst performing in the world.
On Monday, the broader 50-share NSE index was trading up 0.73% at 5,206.40 points.
In the broader market, losers and gainers were almost equal in number, with 166.8 million shares changing hands.
The MSCI’s measure of Asian markets other than Japan was up 1.7%, Japan’s Nikkei was up 1.14% and South Korea’s Kospi was trading higher by 2.4%.
Stocks on the move
• Shree Renuka Sugars fell 20% after Bank of America downgraded the stock to “underperform” from “buy” and lowered its target price, citing lower-than expected September-quarter profit due to the delayed turnaround of its Brazilian operations.
• Reliance Capital fell 2% after it said on Friday its consolidated net profit fell 70% in the September quarter
• Budget carrier Spicejet fell 2.5% after it posted a loss for July-September.
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