Mumbai: Indian shares hit 25-month highs before they closed 0.4% higher on Monday, its fourth straight rise, as earnings optimism and firm global equities boosted sentiments. Financials led the gainers.
The 30-share BSE index closed 0.38% or 66.59 points higher at 17,711.35. It rose as much as 17,793.01 points in the day, its highest level since February 2008. The 50-share NSE index gained 0.4% to 5,302.85 points.
Twenty-one of its components advanced.
Analysts and wealth managers were divided about the market’s direction from now on. Some were optimistic, while others felt it was time to book profits.
“We should move higher from here, said Rakesh Rawal, head of private wealth management at Anand Rathi from Bangalore.
“The earnings and guidance next month should be the next trigger,” Rawal, who manages $1 billion of funds, said.
Foreign funds have poured around $3.9 billion in Indian equities so far this year. A major chunk of this arrived in March, a part of which was directed towards primary market issuance.
“We still have some steam left (in the market rally),” said Apurva Shah, vice-president and head of research at brokerage Prabhudas Lilladher.
“Liquidity flows are helping the market.”
The benchmark index rose 1.4% since the end of 2009, outperforming the MSCI’s measure of Asian markets other than Japan and the MSCI’s emerging markets index which have risen 0.8% and 0.4% respectively.
Amongst its regional peers, Hong Kong’s Hang Seng and China’s Shanghai Composite Index dropped 2.9% and 4.7% so far this year while and Japan’s Nikkei climbed 4.2%.
Earlier this month, a Reuters poll showed the BSE index may rise to 18,000 points by end-June and close 2010 at 19,250.
But not everyone is buying into the optimism.
“Current valuations do not leave anything on the table for investors,” said Arun Kejriwal, director of research firm KRIS.
Kejriwal said there were euro zone concerns which could worry the market in the near term and it remained to be seen how monsoon fared this year.
Financials topped the gainers’ list on promising long-term outlook in an advancing economy, shrugging off near-term worries over inflation.
Headline inflation in Asia’s third-largest economy should peak in March with demand-side pressures likely having a short-term impact on prices, federal chief statistician Pronab Sen had said late last Friday.
Top lender State Bank of India climbed 1.1% while leading private lenders ICICI Bank and HDFC Bank rose 0.6% and 0.9% respectively. Mortgage lender Housing Development Finance Corp rose 2%.
Export-focused software companies dropped on concerns a stronger rupee would hit their revenue.
The rupee climbed to its strongest level since September 2008 earlier in the day, boosted by the dollar’s weakness against major currencies.
India’s top software services outsourcing firm Tata Consultancy Services was down 1.7%, while rivals Infosys Technologies and Wipro shed 2.2% and 0.1% respectively.
Higher base metal prices pushed aluminium maker Hindalco and non-ferrous metals producer Sterlite Industries 3.2% and 2% higher respectively.
London metals rallied, with copper rising almost 2% to its highest level since January.
Top mobile operator Bharti Airtel rose 0.2%. Bharti Airtel and Kuwait’s Zain are likely to sign agreements for the Indian firm’s $9 billion buy of Zain’s African assets on Tuesday, sources told Reuters.
Energy giant Reliance Industries, which has the highest weight on the Sensex, reversed early gains and closed 0.5% lower.
In the broader market, declining shares outnumbered advancing shares in a ratio of 1.8:1 on volume of 462 million shares, higher than Friday’s volume.
Elsewhere in the world, the pan-European FTSEurofirst 300 index of top shares was up 0.5% by 4:00pm, while MSCI’s measure of Asian shares other than Japan rose 0.8%.