Mumbai: Shares climbed for a fifth consecutive session on Thursday, their longest winning run in five months, as investors picked bargains in a market that is still among the worst performers in emerging regions.
Financials powered the main index up more than 1% after food inflation eased to a two-month low in early February on moderating prices of onions and other vegetables.
Analysts said the market was still not out of the woods, with foreign institutional investors (FIIs) turning net sellers this year following a spate of political corruption scandals and rising interest rates.
Reliance Communications fell as much as 2.8% after Anil Ambani, who controls the No. 2 mobile carrier, was questioned on Wednesday by federal police in a widening corruption investigation that has battered the government.
The stock recovered later and ended up 0.3% at 99.95 rupees. For a newsmaker on Anil Ambani, see
“Lot of negative news are surrounding the group,” said K.K. Mital, head of portfolio management services at Globe Capital. “The group needs good luck. But unfortunately it does not seem to be coming its way.”
JPMorgan on Wednesday slashed its target price on the stock by 49% to Rs 82, citing lower estimates for wireless and broadband segments and issues related to spectrum regulations.
The 30-share BSE index rose 1.13% or 205.92 points to 18,506.82, its highest close in three weeks. Nineteen of its components closed in the green. The Nifty or NSE index closed up 1.2% at 5,546.45 points.
The benchmark has risen nearly 6% over five sessions, but is still down 9.7% in 2011, as foreign funds pulled out $1.7 billion.
“Food inflation coming off a bit has provided some relief,” said R.K. Gupta, managing director of Taurus Mutual Fund, but added there was strong resistance for the broader 50-share Nifty index at around 5,600 points.
“If FIIs end up as net buyers for a couple of more sessions and if we are able to hold on above 5,600 level, the downside risk will be limited,” Gupta said.
Foreign funds had bought a record $29.3 billion of stocks in 2010 and helped the BSE index rally 17.4%.
The market breadth was positive almost through the day, with advancing shares outpacing declining ones in a ratio of 1.5:1.
Around 278 million shares changed hands on the BSE, lower than the 30-day average daily volume of 307 million shares.
Top lender State Bank of India firmed nearly 1%, while rivals ICICI Bank and HDFC Bank gained 0.5% and 4.2% respectively.
Mahindra Satyam, which was earlier known as Satyam Computer Services, rose 1.5% after the software services firm agreed to pay $125 million to settle U.S. shareholder litigation arising from an accounting fraud that in 2009 turned into India’s biggest corporate scandal.
Global stocks hit a 30-month high, driven by strong corporate earnings and cautious optimism on the US economic recovery from the Federal Reserve.
World stocks as measured by MSCI All-Country World Index was up 0.3% by 1023 GMT, while the MSCI emerging market index firmed 0.2%.
Bharat Heavy Electricals firmed 1.2% to Rs 2,081.55 after Nomura upgraded the stock to neutral from reduce.
Oberoi Realty gained 6.1% to Rs 248.50, after Goldman Sachs initiated coverage on the real estate developer with a buy rating.
DQ Entertainment rose 5.4% to Rs 78.30, after the animation content provider said it had signed a licensing agreement with Germany’s TV Mania through its merchandising agents in France.