Markets at 6-wk closing highs; RIL up

Markets at 6-wk closing highs; RIL up
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First Published: Mon, Jun 14 2010. 04 55 PM IST
Updated: Mon, Jun 14 2010. 04 55 PM IST
Mumbai: Indian shares rose 1.6% to a six-week closing high on Monday, their fourth straight session of gains, supported by firm world equities, with Reliance Industries rising after the oil and petrochemicals giant made a dramatic return to the telecom sector.
Software majors soared on heavy interest, after falling in recent weeks, helped by improving order visibility and the global economic recovery.
“The order visibility is improving. The global economy seems to be recovering. The IT stocks are rising on the back of these,” said Jigar Shah, vice-president of equity sales at brokerage Motilal Oswal.
The index for IT stocks climbed 3.7% but was still down 0.1% since the start of May.
On Friday, billionaire Mukesh Ambani-controlled Reliance Industries agreed to buy Infotel Broadband, the only company to win a nationwide licence in India’s broadband wireless spectrum auction.
“The Infotel acquisition has a lucrative business case over the next 3-5 years,” BNP Paribas Securities said in a note.
“However, we could get little clarity on the economics of the business from the management, as a large part of the business value chain has yet to be created.”
Separately, the Economic Times reported on Monday the company would also foray into the power sector.
Reliance Industries, which has the highest weight on the Sensex, closed 1.6% higher at Rs1,063.40, after rising as much as 2.2%.
The 30-share BSE index ended up 273.22 points, at 17,338.17, its highest close since 3 May.
Twenty-five of its components closed in the green.
“There is no clear investor trend. It is selective buying happening right now, said Nitin Rakesh, CEO of Motilal Oswal’s asset management business. “A lot of pain is already priced in. Let us see how the monsoon shapes up from here.”
Foreign funds bought net of about $166 million of Indian equities so far this month, with the benchmark index rising 2.3%.
In May, they had dumped $2 billion of stocks and the index had dropped 3.5%, its first monthly decline since January.
IT bellwether Infosys Technologies rose 4.3% while rivals Tata Consultancy Services and Wipro climbed 2.9% and 4.1%, respectively.
Financials advanced even as headline inflation unexpectedly accelerated in May, as investors focused on positive long-term outlook, which is backed by strong economic growth expectations.
Wholesale price index for May rose at a higher-than-expected annual 10.16%, underlining the expectation the central bank would raise rates before its scheduled July review despite concerns over Europe’s debt crisis.
State Bank of India, the country’s No. 1 lender, climbed 0.3% while rivals ICICI Bank and HDFC Bank rose 1.1% and 1.5%, respectively.
Metals makers rose as base metal prices rallied in London, as risk aversion ebbed in the wider markets and investors focused on still-strong demand signals.
Non-ferrous metals producer Sterlite Industries rose 2.8% while aluminium maker Hindalco climbed 2.6%.
In the broader market, nearly two shares advanced for every share that declined in relatively moderate volume of 362 million shares.
The 50-share NSE index rose 1.5% to 5,197.70.
World stocks measured by the MSCI All-Country World Index advanced 0.9% by 1040 GMT while its volatile emerging markets counterpart rose 1.4%.
STOCKS
Dr Reddy’s Laboratories fell 3.6% to Rs1,410.35 after a US court restrained the drug maker from distributing a generic version of allergy drug Allegra-D.
SpiceJet rose more than 6% after the founder of Sun TV, Kalanithi Maran, and his aviation firm Kal Airways Pvt Ltd agreed to buy a 37.7% stake in the airline.
The stock later trimmed gains and closed 1.6% lower at Rs55.15.
Oil explorer Cairn India rose 1.2% to 304.75 rupees as crude oil prices rose to $75 per barrel.
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First Published: Mon, Jun 14 2010. 04 55 PM IST
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