Close: Markets rally by 3% on Goldman, Intel profits

Close: Markets rally by 3% on Goldman, Intel profits
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First Published: Wed, Jul 15 2009. 04 15 PM IST
Updated: Wed, Jul 15 2009. 04 15 PM IST
Mumbai: Indian shares rallied 2.9% on Wednesday, their second consecutive rise, as upbeat results from US firms Goldman Sachs and Intel helped shore up investor confidence worldwide.
Traders said higher start for European bourses boosted investor appetite for riskier bets after the market appeared to lose steam due to concerns about the domestic economy and rich valuations.
State-run power equipment maker Bharat Heavy Electricals extended gains after the finance secretary said the government would announce plans to sell small stakes in state firms in 3 to 4 weeks.
“Bhel has received a few orders in the past few days, and these hopes for divestment is driving the stock further,” Alex Mathew, head of research at Geojit BNP-Paribas Financial Services, said.
Engineering and construction firm Larsen & Toubro, energy giant Reliance Industries and private-sector lender ICICI Bank powered the main index a day after it rose 3.4%, the best in almost 7 weeks.
“We saw some buying by institutions in the latter half of the day, as well as a significant amount of short-covering,” Mathew said. “The volume was also more in the afternoon.”
The 30-share BSE index ended up 2.88%, or 399.54 points, at 14,253.24, its highest close in nearly two weeks, with 29 stocks advancing.
But traders said the market may not be able to sustain gains in the near term, with profit-taking set to emerge unless investors are reassured corporate earnings growth will pick up pace in the next few quarters.
Last week, the market fell 9.4% - its biggest weekly fall in eight months - after the government’s budget disappointed investors who were expecting bold economic and financial reforms.
“The market is still finding it difficult to attract liquidity, and in the absence of any domestic triggers, there is still downside risk even though we are up now due to international markets,” Harendra Kumar, head of research at Centrum Broking, said.
However, the benchmark index is set to gain another 12% by the end of 2009, taking its rise for the year to 60%, as an economic revival boosts corporate earnings and attracts liquidity, a Reuters poll showed.
Larsen rose 4.2% to Rs1,430.15, while Reliance Industries, which has the most weight in the main index, climbed 3.5% to Rs1,875.
ICICI Bank advanced 2.5% to Rs696.45, Bharat Heavy Electricals added 6.3% to Rs2,176.05 and State Bank of India gained 3.2% to Rs1,633.90.
In the broader market, gainers led losers by more than 3.5 to 1 on moderate volume of 417.6 million shares.
The 50-share NSE index ended up 3% at 4,233.50.
Asian shares were higher, with Japan’s Nikkei rising 0.1%, while MSCI’s measure of other Asian markets firmed 2.8%.
At 1023 GMT, the FTSEurofirst 300 index of top European shares was up 1.6% and futures pointed to a higher start on Wall Street.
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First Published: Wed, Jul 15 2009. 04 15 PM IST
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