Markets gain for 6th quarter, longest run in 20 yrs

Markets gain for 6th quarter, longest run in 20 yrs

Mumbai: Indian shares rose for the sixth straight quarter, their longest such run in at least 20 years, after they gained 1% in the quarter ended June.

They rose 1% on Wednesday, helped by European share gains as its central bank’s smaller-than-expected three-month tender results eased concerns over European bank funding.

The tender results were keenly awaited to gauge how reliant European banks are on European Central Bank’s emergency funding as they are due to repay 442 billion euros to the ECB on Thursday. Spanish, Portuguese and Greek banks have been the biggest users of the lending facilities.

For the quarter ended June, the 30-share BSE index outperformed the MSCI’s measure of Asian shares other than Japan which shed nearly 9%.

The BSE index, which rose 4.5% in June to record its best monthly gain since March - when it had risen 6.7%, closed 0.95% or 166.81 points higher at 17.700.90, with 25 of its components logging gains. The 50-share NSE index rose 1.1% to 5,312.50 points.

“FIIs (foreign institutional investors) have been pouring in money into India, when the environment globally is good. But, if the environment turns negative, there is a pause," said Rakesh Rawal, head of private wealth management at Anand Rathi. Foreign funds have pumped in $6.7 billion in Indian equities so far in 2010, after investing a record $17.5 billion in 2009.

“But, there is an India story and it is growing," said Rawal who manages $1 billion of wealth, referring to the world’s second-fastest growing major economy’s strong corporate fundamentals. “If things turn better overseas, I expect the Sensex to touch 21,000 (points) by the year end," Rawal said.

Sensex is up 1.4% in the first half of 2010, and has outperformed its emerging markets peers such as China’s Shanghai Composite Index and Brazil’s which have declined 9.6% and 26.8% respectively.

The index also outperformed the broader MSCI’s emerging markets index. The BSE index may rise to 19,000 points by end-2010, the median estimate in a Reuters poll of 20 market participants showed, while 17 forecast it rising to 21,000 by end-June 2011.

Rawal expects infrastructure and banking stocks to lead growth for the rest of the year. “There are massive investments in infrastructure, and banking sector will grow as it caters to growth in all areas as the economy grows further," said Rawal.


Energy major Reliance Industries, which has the highest weight on the main index, climbed 1.8% on Wednesday. It had shed 1.9% in the previous session.

State-run oil companies rallied further as Prime Minister Manmohan Singh said on Tuesday India will allow market pricing of diesel. Explorer Oil & Natural Gas Corp rose 1.1% while oil marketing companies Bharat Petroleum Hindustan Petroleum, and Indian Oil jumped between 2.3% and 7.9%.

Cigarette-to-hotel business ITC rose 2.6% to Rs304.75, on better earnings expectations.

“June-quarter results could be a catalyst for the stock, since it could result in EBIT (earnings before interest and taxes) margin expansion for the cigarettes business, as price increases taken are higher than necessary to offset tax increases," HSBC Securities said in a note on Tuesday.

Banking stocks rallied after declining in the previous session. The sector index rose 0.8% after dropping 1.5% in the previous session.

Top lender State Bank of India rose 0.3% while nearest rival ICICI Bank rose 1.6%.

Kotak Mahindra Bank rallied as much as 3.6% after Japan’s Sumitomo Mitsui Financial Group (SMFG) said it had agreed to buy a 4.5% stake in the Indian lender for $296 million.

In the broader market, advancing shares outperformed declining ones in the ratio of 1.3:1 on a relatively better volume of 450 million shares.


AstraZeneca Pharma India shares rose as much as the daily maximum limit of 20% for the second straight day and touched an all-time high of Rs1,448.45 after its Swiss parent decided to delist the firm.

The stock closed 12.8% higher at Rs1,361.40.

Alstom Projects climbed 2.9% to Rs670.10 after the company, which provides power generation services and equipment, said it won a 4.58-billion-rupee order from Bharat Heavy Electricals Ltd,