Mumbai: Shares rallied more then 1% on Wednesday, riding a surge in foreign fund investment and improved global appetite for risk. Energy major Reliance Industries led the rise.
Investors were upbeat after world stocks climbed on optimism that stimulus measures were likely to continue as Bank of Japan’s monetary easing moves triggered hopes other central banks may follow suit.
Shipping Corp of India, the country’s largest shipping company, shot up as much as 20.5% to Rs202.50, its highest since January 2008, after the Indian cabinet approved a 10% stake sale in the state-run company.
Foreigners have bought Indian shares worth $20.1 billion in the year to date, with more than a quarter happening since the start of September.
“The way the money is pouring in, it is not likely to stop for a while,” said Vaibhav Sanghavi, director of Ambit Capital.
Analysts have said an uncertain outlook in developed economies was driving foreign funds to chase emerging markets such as India whose economy is forecast to expand 8.5% this year.
At 10:41am, the 30-share BSE index was up 0.73% at 20,557.12 points, with all of its components advancing. It had risen as much as 1.3% in early trade.
The benchmark is up 17.7% in 2010, and is about 600 points from a record high reached in January 2008.
Reliance Industries, which has the highest weight on the index, was up 0.9% at Rs1,032.50. The stock, which is down 5.3% in 2010, is trying to catch up with the broader market rally, traders said.
Sources told Reuters on Tuesday Reliance and Chesapeake Energy Inc have ended talks over the sale of a stake in the US company’s position in the Eagle Ford shale in south Texas.
Financials marched ahead on expectation loan demand will climb in a fast-growing economy. Leading lenders State Bank of India, ICICI Bank and HDFC Bank were up between 0.2% and 0.8%.
Sanghavi said quarterly results starting from next week would be watched for direction.
Infosys Technologies, the No. 2 outsourcer that kicks off the earnings parade on 15 October, was up 0.3%. Bigger rival Tata Consultancy Services and No. 3 Wipro gained 0.9 and 1.1% respectively.
“While we remain optimistic on the medium-to-long term prospects of the sector, relatively high valuations and a stronger rupee may limit upsides in the near term,” Kotak Securities said in a note.
“We expect large caps to outperform as they are better equipped to counter the impact of appreciating rupee, high attrition and any potential economic slowdown globally.”
The brokerage said Infosys and Tata Consultancy remained their preferred large-cap picks.
In the broader market, gainers were nearly thrice the number of losers, while 180 million shares changed hands on the BSE.
The 50-share NSE index was up 0.7% at 6,186.80.
Elsewhere, the MSCI’s measure of Asian markets other than Japan was up 1.5%, while Japan’s Nikkei rose 1.6%.
Movie distributor Eros International Media Ltd debuted at a premium of 23% to its issue price of Rs175. The stock erased some of the early gains and was trading at Rs190.90.
Tutorial service provider Career Point Infosystems listed at a premium of 53.2% against its issue price of Rs310, and extended gains to Rs541.25.
Travel operator Cox & Kings was up 5.6% at Rs604.60 after the Reserve Bank of India approved an increase in foreign institutional investment limit to 74%.