Sensex at 6-week closing high; metals shine

Sensex at 6-week closing high; metals shine

Mumbai: Shares firmed 0.5% on Friday to their highest close in six-week, backed by a rally in metal producers on promising prospects for industrial metals but trade was thin with only a week left for the year end.

Shares in Anil Ambani’s Reliance Communications, India’s No. 2 mobile carrier, surged in late trade on what traders said were rumours older brother Mukesh Ambani-controlled Reliance Industries would invest in it.

Reliance Industries denied any move to buy a stake in the company, while Reliance Communications could not immediately be reached for comment.

“We strongly deny any move to acquire any stake in RComm," a Reliance Industries spokesman said.

Reliance Communications closed 10.5% up, while other Anil Ambani group companies such as Reliance Power, Reliance Mediaworks and Reliance Infrastructure ended up between 3.4% and 6.2%.

The 30-share BSE index traded in a narrow 200-point range and closed 0.45%, or 90.78 points, higher at 20,073.66 points -- its second straight weekly gain. It rose 1.1% for the week.

Activity was lacklustre in the broader market with only 242 million shares changing hands on the BSE, while twenty four of its components advanced. Gainers outpaced losers in the ratio of 1.2:1.

Reliance Communications was the second-most traded main stock on the BSE with a volume of 6.4 million shares -- 4.7 times the stock’s 30-day average volume.

With market participants confident of Asia’s third-largest economy’s growth prospects, the outlook for 2011 was upbeat.

The benchmark index is up 14.9% so far this year, with $28.5 billion of foreign funds investments flowing into Indian equities -- set to be the highest yearly inflow.

Rakesh Rawal, head of private wealth management at brokerage Anand Rathi, expects the Sensex to gain 20% in 2011.

“There is no reason to believe why this strong overseas interest in India should not continue to grow," said Rawal, adding that he expects Sensex EPS to rise by 20% in 2011.

Data from fund tracker EPFR showed emerging markets are on their way to report record inflows in 2010 with equity fund inflows so far reaching $92.5 billion.

“The sectors which rely on the domestic growth story may give better returns than others in 2011," Rawal said, citing banking, infrastructure and consumer durables as his preferred bets.

Non-ferrous metals producer Sterlite Industries and aluminium producer Hindalco ended up 2.6% and 2.4%, respectively.

Tata Steel, world’s seventh-largest maker of the alloy, closed up 1.8%.

“Outlook for metal stocks is positive. Base metal prices are showing strength," said K.K. Mital, head of portfolio management services at Globe Capital.

Vehicles maker Tata Motors pulled back 3.2% as investors locked in gains. The stock has added nearly 65% this year after a spectacular 400% rise in 2009.

The 50-share NSE index firmed 0.5% to 6,011.60 points.

The MSCI’s measure of Asian markets other than Japan was down 0.3%, while Japan’s Nikkei was trading 0.7% lower.

At 04:00 pm, the MSCI world equity index was and the emerging markets index were barely changed.