Mumbai: The BSE Sensex rose 2.2% on Monday, tracking strong Asian peers, after Wall Street rose on Friday following surprisingly good US home sales data and positive comments by the chief of the US Federal Reserve.
Energy giant Reliance Industries rose 2.2% to Rs1,971, while state-run explorer Oil and Natural Gas Corp climbed 1.7% to Rs1,212 as oil prices rose above $74 a barrel, trading near a 10-month high.
Tata Steel advanced 2.5% to Rs456 after the Times newspaper said the company’s European unit, Corus, is preparing to restart some of its idled capacity as demand improves.
Private-sector lender ICICI Bank, which added 2.7% to Rs765.85, and engineering and construction firm Larsen & Toubro that was up 3% at Rs1,528 were the other major gainers.
By 12:50pm, the 30-share BSE index was up 354.54 points at 15595.37 points, with all stocks advancing. The 50-share NSE index was up 2.2% at 4,630.05.
“Even though various technical and sentiment indicators are moving in opposite directions, the market is likely to make positive progress in the months ahead,” Morgan Stanley analyst Ridham Desai said.
The benchmark has fallen 2.7% this month, hurt by worries about weak monsoon rains - crucial for India’s domestic-demand-led economy - high valuations and looming inflation.
Fears that stocks worldwide have run ahead of fundamentals have risen recently in the wake of a slew of downbeat data from across the world.
But the Indian market rose 1.5% on Friday, as investors hunted bargains on hopes poor rainfall would not hurt company earnings as much as expected.
“We reckon that earnings momentum will continue to stay positive and liquidity continues to be strong,” Desai said.
“The jury is still out on the vigour of the growth recovery and, in part, that will determine how much pace this market recovery gathers beyond 2009.”
In the broader market on Monday, gainers led losers 3 to 1 on relatively moderate volume of 126.5 million shares. The 50-share NSE index was up 2.2% at 4,630.05.
Asian shares were higher on Monday, with Japan’s Nikkei up 3.3%, while MSCI’s measure of other Asian markets rose 2.8%.
The S&P 500 and the Nasdaq both hit 10-month intraday highs, while the Dow rose to its highest level in nine months, on Friday.
Sales of previously owned US homes in July notched their fastest pace in nearly two years, an industry survey showed on Friday, while US Federal Reserve chief Ben Bernanke offered his clearest signal yet that he thinks a global recovery is at hand.