Shares rise to highest close since May 2008

Shares rise to highest close since May 2008

Mumbai: Indian shares rose 0.24% to their highest close in 19 months on Tuesday, gaining for a fourth straight session as hopes of robust December quarter earnings and better global economic conditions in 2010 supported sentiment.

Financial stocks led gainers, with investors keen on the sector’s outlook in a growing economy despite the hurdle of expected tightenings in monetary policy from next month.

“Also, our banks are relatively insulated to crisis situations as compared with global banks," said Arun Kejriwal, director of research firm KRIS.

Top private lender ICICI Bank rose 1.7% to Rs877.65 and top lender State Bank of India rose 0.1% to Rs2,220.85. Mortgage lender Housing Development Finance Corp rose 1.25% to Rs2,685.10.

NMDC gained 2.8% to Rs425.75. The government said it planned to sell an 8.4% stake in a follow-on offer in the state-run miner before the end of March, which would raise about $3 billion based on current market values.

Top power producer NTPC, another state-run firm which the government plans to sell a further stake in next year, rose 1.4% to Rs233.20.

The 30-share BSE Index ended up 40.95 points at 17,401.56, its highest close since 16 May 2008.

The index rose to a two-month high of 17,486.05 in late trade. The market hit its 2009 peak of 17,493.17 on 17 October, when it reached it highest since mid-May 2008.

“We did not see fresh buying coming in at the peak, and so we could not hold on to the higher level," KRIS’s Kejriwal said.

“If we break 17,500 level on Sensex, it will give momentum to the market and we could see some good upside from there."

The market has rallied 80% in 2009, powered by net foreign fund buying of around $17 billion of equities.

“The year 2010 should be good. All equations are turning out to be good. Robust GDP growth numbers, industrial output data, availability of funds should help our market," said Deven Choksey, MD and CEO, of KR Choksey Shares.

“However, the withdrawal of stimulus globally could dent the market for a short period," he added.

Telecom majors Bharti Airtel and Reliance Communications climbed 1.5% and 0.5% respectively, as some investors saw value in the main index’s worst performers for 2009.

Drug maker Ranbaxy reversed early losses to close 0.1% higher. Its shares fell 4% in early deals after Ranbaxy had said the US Food and Drug Administration (FDA) had warned a US unit about violations of good manufacturing practices.

“While this development, by itself, does not appear to have a material impact on financials or the key drivers, it is likely to affect recently rising confidence levels with respect to the stock among investors, given its past issues with the FDA," Citigroup analysts said in a note.

Iron ore exporter Sesa Goa ended up 0.6% at Rs406. It declined as much as 5.9% earlier after the government raised export taxes on iron ore.

In the broader market, gainers outnumbered losers by nearly two to one on volume of 376 million shares.

The 50-share NSE index ended up 0.2% at 5,187.95,its highest close since 5 May 2008. During trade it rose to a high of 5,214.60, also its highest since 5 May 2008.