BackMarkets up 0.7%; financials lead gains
Markets up 0.7%; financials lead gains
PremiumMumbai: Shares were trading 0.7% higher on Wednesday, in sync with their Asian peers, ahead of a US Federal Reserve meeting that is expected to announce quantitative easing.
Financials led the gains as they shrugged off fears that central bank may continue with its tightening view and that there could be a near-term impact on economic growth, and focused on the optimistic long-term demand outlook.
A Reuters poll showed the Reserve Bank of India is expected to raise rates once more in this fiscal year ending March after it raised rates by 25 basis points on Tuesday.
The central bank’s move to raise its lending and borrowing rates by 25 basis points each may have a small negative short-term impact on economic growth, finance minister Pranab Mukherjee said late on Tuesday.
At 10:56am, the 30-share BSE index was up 0.74% at 20,495.73 points, with 29 of its components advancing. The 50-share NSE index was up 0.7% at 6,164.45.
“The market is waiting for the Fed announcement," said K.K. Mital, head of portfolio management services at Globe Capital, “But, Coal India money is coming back, which is pushing the market higher. Results have been decent. There are no big negatives surprises so far."
Coal India’s $3.5 billion initial share sale, which concluded last month, had collected around $50 billion in rupees. The stock debuts on Thursday.
The benchmark index is up 17.5% so far this year, with net foreign portfolio investment adding up to $26.1 billion.
The banking sector index rose as much as 0.9% to a record high of 14,657.07 points.
Leading lenders State Bank of India, ICICI Bank and HDFC Bank rose between 0.4% and 1.1%.
Cigarette-to-hotel business ITC was up 1.4%, tracking the strong domestic consumption story. The stock has already gained 40% year to date.
Brokerage Sharekhan expects ITC’s bottom line to grow at a compounded annual growth rate of about 20% over FY2010-12, and raised its rating on the stock to buy from hold.
State-run gas transporter GAIL (India) was down 0.3% ahead of its quarterly earnings announcement.
In the broader market, gainers led losers by a ratio of 2.5:1 on volume of 200 million shares.
Elsewhere, the MSCI’s measure of Asian markets other than Japan was up 0.9%, while Japanese markets were closed for a public holiday.
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