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Shares rise on growth outlook; ONGC gains

Shares rise on growth outlook; ONGC gains
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First Published: Thu, Dec 02 2010. 12 15 PM IST
Updated: Thu, Dec 02 2010. 12 15 PM IST
Bangalore: Shares climbed 0.7% on Thursday as investors were upbeat about corporate earnings in a fast-expanding economy, while firmer Asian peers also boosted sentiment.
Explorer Oil and Natural Gas Corp (ONGC) rallied as much as 5.1% after the Indian cabinet approved the state-run firm’s proposal for a stock split and a one-for-one bonus issue.
Financials rose after the cabinet decided to pump an additional Rs6000 crore ($1.3 billion) into state-run banks to improve their capital adequacy and to lift the government’s stake in them.
“People are keen to buy in this market. Valuations are tempting after the correction in the past few weeks,” said Deven Choksey, managing director of KR Choksey.
The 30-share BSE index rose 0.7%, or 135 points, to 19,985.15 points at 11:27pm, with 21 of its components advancing.
The benchmark had fallen 2.6% in November, its biggest monthly loss since May, battered by a series of scandals that most hurt stocks in financial, telecom and real estate sectors.
The scandals - which include issue of telecom licenses at low prices and a bribes-for-loans scam that saw eight financial industry executives arrested last week - will continue to be an overhang for the markets in the near term, analysts said.
The market is, however, up over 14% so far this year bolstered by overseas portfolio investments worth about $29 billion.
“India is a compelling story for foreign investors as it is looking at a 9% economic growth. Consumption is growing, rural economy is also buoyant,” Choksey said.
On Wednesday, a survey showed the manufacturing sector in Asia’s third-largest economy expanded at its fastest pace in six months in November on the back of robust new business and a sharp rise in export orders.
Official data earlier showed the Indian economy grew a better-than- expected 8.9% in the September quarter, boosted by robust farm output and manufacturing.
Hero Honda fell more than 7% early after the Business Standard reported the motorcycle maker has agreed to increase its royalty payments to Honda Motor Co to 8% of annual sales in return for a technology makeover and a stake sale by the Japanese firm in the venture.
The banking sector index was up 1%, with ICICI Bank gaining almost 2% and State Bank of India up 0.7%.
Wipro, the No. 3 outsourcer, rose more than 4% after the company said its billionaire chairman Azim Premji would transfer 8.7% holding to an irrevocable trust. Dealers said this would likely help improve liquidity in the stock.
In the broader market, gainers outpaced losers by a ratio of 2.8-to-1 on volume of about 170 million shares.
The broader 50-share NSE index was up 0.7% at 6,005.10.
Elsewhere, the MSCI’s measure of Asian markets other than Japan gained 1.5% by 0602 GMT, while Japan’s Nikkei was up 1.8%.
STOCKS
Mastek Ltd soared 18.5%, after the Software services firm said its US unit had acquired the assets of SEG Software for an undisclosed amount.
Dewan Housing Finance was trading 7.8% higher at Rs 300 after it said the company, along with its founders Wadhawan Housing and Caledonia Investments, had acquired Deutsche Postbank Home Finance for Rs1079 crore.
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First Published: Thu, Dec 02 2010. 12 15 PM IST
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