Markets gain 0.2%; ICICI, Hindalco rise

Markets gain 0.2%; ICICI, Hindalco rise

Mumbai: Shares rose for the second day to close 0.2% higher on Tuesday, tracking small rise in world stocks, with financials leading the charge.

Asian stocks turned positive for 2010 and surged to their highest level in nearly three months, on the back of strong European bank results and a sign the U.S. economy was stronger than expected.

Leading private lender ICICI Bank, topped the gainers and further rose 2.4% to 962.10 rupees, its best close in more than 3 months. It had gained 3.9% on Monday, following an in-line 17% rise in quarterly net profit and a 15-percent credit growth forecast in 2010/11.

The 30-share BSE Index closed 0.19% or 33.62 points higher at 18,114.83, with 14 of its components advancing.

“People are not ready to sell in a hurry even when valuations are looking expensive," said Gajendra Nagpal, CEO of Unicon Financial.

“FIIs (foreign institutional investors) want to stay invested in India and are looking at a long-term opportunity here."

The benchmark index is only around 123 points away from testing a new 2-“ year high. It is up 3.7% so far in 2010, fuelled by foreign fund inflows of $10.5 billion, of which a portion was absorbed by primary market issuances.

SKS Microfinance’s $353 million initial public offering was 13.55 times covered late Monday, as investors bet on its business model of lending to poorer borrowers in Asia’s third-largest economy.

The 50-share NSE index climbed 0.2% to 5,439.55 points.

Gainers outpaced losers in a ratio of 1.1:1, while a relatively moderate volume of 383 million shares changed hands on the BSE.

“While tail risk is in play, we do not believe that the market is likely to sell off in a big way anytime in the near future," Morgan Stanley said in a note.

“The market is likely to reach higher levels before such a sell-off happens."

Other financial stocks also rallied as investors placed bets on their long-term outlook on expectations loan demand would pick up in world’s second-fastest growing major economy after China.

Top lender State Bank of India and mortgage lender Housing Development Finance Corp climbed 0.9% each.

Private lender HDFC Bank bucked the trend and shed 0.6%.

Energy giant Reliance Industries, which has the highest weight on the main index, climbed 1.2% to Rs1,026.20.

Aluminium maker Hindalco reversed early losses and closed 0.6% higher after its June quarter net rose 11%, beating the street view.

Top motorcycle maker Hero Honda raced 1.8% after its July sales rose 16.6%.

Maruti Suzuki firmed 0.4% as the leading car maker raised prices across models by 1% to 1.5% citing a sharp rise in input costs.

Jaiprakash Associates rose 0.5% after its cement shipments in July jumped 60.5% while no. 2 cement producer ACC dropped 0.6% as its cement shipments fell 12.4% last month.

Elsewhere, MSCI’s measure of Asian shares other than Japan was up 0.3% at 1021 GMT, and was in the positive territory for the year to date with a 0.1% gain. The FTSEurofirst 300 index was down 0.1%.

The MSCI world equity index and the Thomson Reuters global stock index climbed 0.3% each.