Close: Markets up 3.2% to highest close in 2 months

Close: Markets up 3.2% to highest close in 2 months

Mumbai: Indian shares rose 3.23% on Wednesday to their highest close since mid-October, with Reliance Industries and banks leading the gains on favourable long-term prospects and relief that monetary policy has not been tightened.

Finance minister Pranab Mukherjee said sustaining high growth was a priority, and said Asia’s third-largest economy could grow 7.75% in the fiscal year ending in March.

“If there is an India story, there is definitely a case for banks to grow," said Rakesh Rawal, head of private wealth management at Anand Rathi Financial Services.

Leading bank State Bank of India rose 2% and ICICI Bank climbed 4.3%, helped by easing concerns about an imminent tightening of monetary policy.

“The negatives which we were expecting in terms of liquidity tightening did not happen as yet, and may not happen in near future. This helped our market," said Nilesh Doshi, president of equities at Techno Shares.

The 30-share BSE Index climbed 539.11 points to 17,231.11, its highest close since the special Diwali session on 17 October when the market had ended at its highest since mid-May 2008. The 50-share NSE index was closed 3.18% higher at 5,144.60, its second-highest close since May 2008.

All 30 shares rose as the index logged its biggest daily gain in seven weeks.

The benchmark is up 79% so far this year, and is on track to post its best yearly gain since 1991.

Energy giant Reliance Industries rose 4.6% to Rs1,065.90. The company had said on Tuesday it had made a gas discovery in one of its exploration blocks in the Krishna Godavari basin off the country’s east coast.

“Reliance has underperformed in recent times. It was just waiting for a trigger to catch up with the broader market. And, the gas find news pushed it higher," said Rawal.

The stock is up 5.4% since the end of June while the main index has risen 18.9%.

Metals stocks extended Tuesday’s gains on a strong demand outlook for metals in 2010.

“There is growing perception that there is likely be an increase in demand for metals globally, which is why we have seen strong buying interest in metals stocks," said Rawal.

Aluminium maker Hindalco closed 7.8% higher at Rs153.20. Steel maker Tata Steel finished 4.45% higher at 603.30 rupees.

Copper producer Sterlite Industries climbed more than 5% to 847.20 rupees.

Export-focused software services companies also gained on hopes of an improving global outlook, with Infosys Technologies and Tata Consultancy Services touching all-time highs at Rs2,590 and Rs747 respectively.

Infosys and Tata Consultancy closed 3.3 and 2.8% higher respectively.

In the broader market, gainers were double the number of losers on a volume of 435 million shares, around one-third higher than recent daily volumes.