Mumbai: Indian shares began the month on a positive note led by software firms and closed Wednesday 1.3% higher, their best gain in 10 weeks, tracking regional markets which were boosted by a Chinese manufacturing rebound.
India’s top software services firm Tata Consultancy Services rose 1.6% buoyed by its UK subsidiary Diligenta’s contracts win totalling £250 million.
Smaller rivals Infosys Technologies and Wipro firmed 2.5% and 0.9% respectively.
“We remain positive on the demand outlook for the Indian IT services industry,” Kotak Securities said in a note. “We expect the volume momentum seen over the past three quarters to sustain over the next few quarters.”
The 30-share BSE index gained 1.31% or 234.75 points at 18,205.87, with 27 of its components closing in the green.
“Market will stay rangebound this month. Upside will be capped in the near-term as valuations are not looking cheap,” said R. K. Gupta, managing director of Taurus Mutual Fund.
“The key event to watch for in this month is the RBI’s (Reserve Bank of India’s) mid-quarter review on Sept. 16.”
Foreign funds have ploughed $12.8 billion in Indian equities this year, including in the primary market offerings. The benchmark index has added 4.2% so far in 2010.
Financials rose on optimism after data on Tuesday showed India’s economy grew at its fastest pace in nearly three years in the April-June quarter.
But, data on Wednesday showed India’s manufacturing growth eased in August as the pace of new orders cooled following a slowdown in exports, underlining expectations that economic expansion has peaked this year.
Leading lender State Bank of India rose 0.4% and rival private lenders ICICI Bank and HDFC Bank firmed 1.8% and 0.8% respectively. Mortgage lender Housing Development Finance Corp bucked the trend and edged 0.4% lower.
Energy giant Reliance Industries, which has the highest weight on the Sensex, recouped some of Tuesday’s losses and closed 1.9% higher.
It had dropped more than 3% in the previous session as investors gave a thumbs down to the company’s stake buy in hotel chain EIH.
Vehicle makers mostly pushed higher, cheering robust August sales. Top car maker Maruti Suzuki gained 1.4% while top utility vehicle maker Mahindra & Mahindra closed 0.3% higher.
Vehicles maker Tata Motors edged 0.1% higher while motorcycle maker Hero Honda bucked the trend and slipped 1.9%.
Metals stocks rallied as a rebound in manufacturing in China propelled base metals. Non-ferrous metals producer Sterlite Industries rose 3.6% with Nomura upgrading the stock to “buy” from “neutral.”
Aluminium maker Hindalco firmed 4.5% while Tata Steel, the world’s seventh-largest steelmaker, gained 2.9%.
Nearly three shares gained for every one that declined in a low volume of 361 million shares.
The 50-share NSE index gained 1.3% to 5,471.85 points.
World stocks were firm, as data showed a manufacturing rebound in China and stronger-than-expected growth in Australia.
The MSCI world equity index rose 0.8% by 1039 GMT, while the Thomson Reuters global stock index climbed 0.9%.
Top mobile operator Bharti Airtel rose 3.1% to 337.30 rupees ahead of its annual shareholders meet.
Kingfisher Airlines rose 5.1% to Rs62.40 after the carrier’s board approved raising up to $1 billion through various means including rights issue, preferential issue or global depositary receipts.
Sun Pharmaceutical slipped 0.5% to Rs1,751.30 after the drugmaker late Tuesday said US FDA has warned its US unit about manufacturing problems uncovered at a plant in New Jersey.
TVS Motor firmed 1.3% to Rs143.95, as the vehicle maker said its August sales were up 34% on year.