Close: Markets rally 2.5% on strong global stocks

Close: Markets rally 2.5% on strong global stocks
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First Published: Mon, Aug 24 2009. 06 49 PM IST
Updated: Mon, Aug 24 2009. 06 49 PM IST
Mumbai: Indian shares rallied 2.55% to their best close in almost three weeks on Monday, as strong US home sales data and upbeat comments by the chief of the US Federal Reserve lifted investor confidence worldwide.
Energy giant Reliance Industries rose 2.4% to Rs1,974.25, while state-run explorer Oil and Natural Gas Corp climbed 0.3% to Rs1,195.35 as oil prices rose above $74 a barrel, trading near a 10-month high.
Tata Steel advanced 3% to Rs458.15 after the Times newspaper said the company’s European unit, Corus, is preparing to restart some of its idled capacity as demand improves.
Private-sector lender ICICI Bank, which added 3% to Rs767.65, and engineering and construction firm Larsen & Toubro that ended up 4.5% at Rs1,550.65 were the other major gainers.
Diversified cigarette maker ITC gained 4.8% to Rs239.80. ITC is favoured by brokerages as it derives about 60% of its revenue from its cigarette business, which is unaffected by a fall in rural spending as weak monsoon rains cut incomes.
“Overseas markets, whether they may be in the U.S., Europe or Shanghai, are up, so the Indian market is also up,” R.K. Gupta, managing director of Taurus Mutual Fund, said.
“The market is running in a narrow range for now, and it could continue to take cues from overseas markets for a few more days.”
The 30-share BSE index ended up 387.92 points at 15,628.75, its best close since 5 August. All stocks advanced.
“Even though various technical and sentiment indicators are moving in opposite directions, the market is likely to make positive progress in the months ahead,” Morgan Stanley analyst Ridham Desai said.
The BSE benchmark had fallen 4.2% this month through Thursday, hurt by worries about weak monsoon rains - crucial for India’s domestic-demand-led economy - high valuations and looming inflation.
But the Indian market rose 1.5% on Friday, as investors hunted bargains on hopes poor rainfall would not hurt company earnings as much as expected.
“We reckon that earnings momentum will continue to stay positive and liquidity continues to be strong,” Desai said.
“The jury is still out on the vigour of the growth recovery and, in part, that will determine how much pace this market recovery gathers beyond 2009.”
In the broader market on Monday, gainers led losers by almost 3 to 1 on relatively moderate volume of 413.9 million shares.
The 50-share NSE index rose 2.5% to 4,642.80.
Asian shares were higher on Monday, with Japan’s Nikkei rising 3.35%, while MSCI’s measure of other Asian markets was up 2.8%.
At 1030 GMT, the FTSEurofirst 300 index of top European shares was up 0.8%. US stock index futures indicated a stronger start on Wall Street on Monday.
On Friday, the S&P 500 and the Nasdaq both hit 10-month intraday highs, while the Dow rose to its highest level in nine months.
Sales of previously owned US homes in July notched their fastest pace in nearly two years, an industry survey showed on Friday, while US Federal Reserve chief Ben Bernanke offered his clearest signal yet that he thinks a global recovery is at hand.
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First Published: Mon, Aug 24 2009. 06 49 PM IST
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