Shares rise for 2nd week; SBI, Cairn at record high

Shares rise for 2nd week; SBI, Cairn at record high

Mumbai: Indian shares rose for the second week in August as they closed half a percent higher on Friday, lifted by firm Asian stocks and led by gains in top lender State Bank of India, which recorded a fresh all-time high.

Traders said the outlook for the market was bullish.

A drop in European shares capped the gains.

SBI rose as much as 3.4% to Rs2,879.95, its highest level ever, as investors gave a thumbs up to its June quarter earnings which beat market estimates.

The BSE 30-share index Sensex rose 0.52% or 93.13 points to 18,167.03 points, taking gains in the week to 0.1%. Two-thirds of its components advanced.

“Market will be rangebound until we have fresh triggers to drive it up, now that earnings season nears close," said Nitin Rakesh, CEO of Motilal Oswal’s asset management business..

“But the sentiment is definitely bullish and capital flows into our country will continue. We had positive surprises in the last leg of earnings season. Monsoon is no longer a worry either."

The Sensex is up 1.7% so far in August, and has risen 4% in 2010, with foreign funds pumping in $11.3 billion in Indian equities.

So far in the year, the BSE benchmark has outperformed broader indexes such as MSCI’s measure of Asian markets other than Japan and emerging markets index which have dropped 3.2% and 1.3% respectively.

Oil explorer Cairn India rose as much as 5.1% to an all-time high of Rs358, as a source told Reuters that India-focused Vedanta Resources will take a 51% stake in the Indian firm for $8 billion to $8.5 billion in a deal that is likely to be announced by Monday.

Sterlite Industries, a unit of Vedanta, dropped 4.3%.

“This is a knee-jerk reaction. Sterlite has huge cash balances which the group may use to fund Cairn India stake buy," said Deven Choksey, managing director and CEO of KR Choksey Shares.

Tata Steel rose as much as 4.1% as investors ignored the dull outlook and the quarterly net profit which fell short of estimates.

“While Corus results slightly disappointed, it was more than compensated by strong profitability at the India operations," Goldman Sachs said in a note reiterating a “buy" rating on the stock.

“While we expect 2QFY11 to be relatively weak, due to seasonal softening of demand and cost push, we expect prices to start firming up by early Sep leading to a strong 2HFY11," the investment bank said.

The stocks erased some early gains and closed 1.4% higher.

Advancing shares thrashed declining ones in the ratio of 1.1:1 while 469 million shares changed hands on the BSE.

SBI closed 2.4% higher at Rs2,849.40.

Other financials also climbed, with sentiment boosted by SBI’s results and an optimistic demand outlook for loans backed by robust economic growth expectations in Asia’s third-largest economy.

Leading private lenders ICICI Bank and HDFC Bank firmed 1.2% and 0.6% respectively. Mortgage lender Housing Development Finance Corp rose 0.2%.

India’s No.2 mobile operator Reliance Communications dropped 2.9% ahead of its quarterly earnings announcement. After the market closed, the firm reported a quarterly net profit of Rs251 crore, sharply lagging estimates.

Cigarette-to-hotel business ITC rose nearly 2%, riding on higher domestic consumption in the world’s second-fastest growing major economy.

Energy giant Reliance Industries gained 0.7% after declining 5.3% over last seven sessions.

The NSE 50-share index Nifty rose 0.7% to 5,452.10.

Elsewhere in the world, the FTSEurofirst 300 index dropped 0.6% by 1023 GMT, while Asian markets other than Japan were up 0.9%.