Markets gain 0.7% on expected inflation

Markets gain 0.7% on expected inflation

Mumbai: Main share index and the partially convertible rupee extended gains after September inflation data came largely in line with expectations on Friday.

The main share index extended gains to 0.7% from 0.5% before the data.

The Reserve Bank of India has raised rates a dozen times since mid-March 2010 to rein in high inflation, and it meets on 25 October to review policy with the market cautious on whether it would pause or raise rates again.

The wholesale price index , the most widely watched inflation gauge in India, rose 9.72% in September from a year earlier, easing slightly from 9.78% in August, a Reuters poll showed.

Energy major Reliance Industries , India’s most valuable firm and the heaviest stock in the main index, rose more than 1%, a day ahead of its quarterly earnings announcement.

Analysts polled by Reuters expect Reliance, controlled by billionaire Mukesh Ambani, to report a 16% rise in September quarter profit on strong refining margins.

The stock, however, is down a fifth this year on falling gas output.

Banking stocks were mixed. Top lender State Bank of India was down 0.1%, while No. 2 ICICI bank was up 0.1%. The sector index was little changed.

Central bank Governor Duvvuri Subbarao said on Thursday it was sensitive to both slowing growth and high inflation.

The benchmark BSE index is down more than 17% this year as rising interest rates have started biting into corporate profits and a series of scandals have paralysed government policy making.

Shares in top car maker Maruti Suzuki were down 2% at 1,037. The company, majority owned by Japan’s Suzuki Motor , is losing output due to a lingering labour strike.

The 50-share NSE index was up 0.19% at 5,087.40. In the broader market, there were 604 gainers for 629 losers on total volume of 111 million shares.

Asian shares inched down on Friday, tracking New York and European shares lower as weak Chinese trade data raised concerns about the global economy.

The MSCI’s broadest index of Asia Pacific shares outside Japan was down 0.55%, while Japan’s Nikkei fell 0.75%.

STOCKS

DLF fell 3.3% to 230.55 after Goldman Sachs removed the stock from its Asia Pacific buy list and downgraded to ‘neutral´ from ‘buy´ with a target price of 254 citing limited upside to operational estimates.

SpiceJet rose 3.6% to 21.80 after it said it had allotted 35.9 million shares at a premium of 26.48 to Kalanithi Maran, promoter of the company.

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