Mumbai: Markets rose more than 1% on Tuesday after better-than-expected US consumer spending data eased concerns about the health of the world’s largest economy and triggered a rally in world markets.
Investors, however, were cautious ahead of quarterly economic growth data due at 11:00am, and market holidays over the next two days.
India’s economy, Asia’s third-largest, probably grew an annual 7.6% in the quarter through June, slowing from the previous quarter’s 7.8% growth, the median forecast from a poll of 28 economists showed.
Infosys , India’s second-largest software services exporter, was among the major gainers rising as much as 2.3% to 2,359.90 rupees as the US data boosted prospects for outsourcing demand in its largest market.
At 10:33am, the benchmark 30-share BSE index was trading up 1.05% at 16,589.20 points, after having risen as much as 1.6% in opening deals, with 24 of its components in the positive territory.
“The global markets have helped the sentiment and an improvement in the domestic political situation has also boosted hopes for some pending reforms to be taken up for discussion,” said K.K. Mital, head of portfolio management at Globe Capital.
India’s huge anti-corruption protests may give impetus to a beleaguered government to push its reform process and help ailing economic growth and plummeting business confidence, analysts say.
“The economic growth data is very important for the market and it will give a sense of the growth in this year against the backdrop of the sharp rise in interest rates in recent months,” Mital said.
The BSE index, which is down more than 19% this year, is set to post its second straight monthly fall in August, as rising interest rates and worries about the health of global economy led investors to pare exposure to risky assets.
Concerns about a slowdown in the Indian economy had also triggered a sell-off in the local stock market. Morgan Stanley had earlier this month pared its growth forecast for the current fiscal year to 7.2% from 7.7% earlier.
Wall Street’s main indexes closed between 2.3% and 3.3% higher on Monday after a report showed consumer spending recorded its largest increase in five months in July in the United States.
Shares in non-bank finance companies rose for the second day, after the central bank said it would allow private sector firms that do not have large exposure in the construction or broking sectors to apply for licences to set up banks.
Reliance Capital was up 2.7% at Rs 387.35, Bajaj Finance was trading 1.9% higher at Rs 623.50 and Mahindra & Mahindra Financial Services rose 3.2% to Rs 627.10.
Citibank said in a report that introduction of new banks was likely to expand growth opportunities in the sector, but it was also likely to increase existing fragmentation and raise competitive intensity both on the lending and deposit side.
Shares in index heavyweights Reliance Industries and the country’s No. 2 lender ICICI Bank , gained 1.9% and 1.7%, respectively, on bargain hunting by institutional investors after the recent sell-off.
Reliance and ICICI are down 27% and 24%, respectively, so far this year.
Maruti Suzuki was down 1.2% at Rs 1,066.60 after India’s top car maker on Monday halted production at one of its plants after it dismissed some workers and asked all others to sign a “good conduct bond”.
The broader 50-share NSE index was up 1.05% at 4,971.40 points.
In the broader market, losers were ahead of gainers in the ratio of 3.2:1 in relatively low volume of 144 million shares.
BGR Energy Systems Ltd was up 4.4% at Rs 325.40 after the company said it had bagged a contract worth Rs 444 crore.
Religare Enterprises was trading 2.2% higher at Rs 430.10 after the company said it had formed an advisory panel to apply for a new banking licence.