Shares rise to highest close since May 2008

Shares rise to highest close since May 2008

Mumbai: Indian shares rose 0.75% on Thursday to their highest close since May 2008, led by gains in auto makers as optimism grew about third-quarter earnings and the long-term prospects of Asia’s third-largest economy.

Tata Motors hit its highest in nearly two years during trade before ending up 4.4% at Rs779.95, as expectations of robust sales in 2010 lifted the auto sector.

Kotak Securities upgraded Tata Motors to ‘add´ from ‘sell´ earlier this week on a view of improving profitability.

“Sentiment is very positive after the finance minister’s GDP growth forecast yesterday," said Manish Sonthalia, fund manager of portfolio management services at brokerage Motilal Oswal.

“Also, there are expectations of robust December quarter earnings."

The 30-share BSE index rose 129.50 points higher at 17,360.51, its highest close since 16 May 2008, with 26 components rising.

Three successive gains saw the market end the holiday-shortened week up 3.8%, its biggest weekly gain in six weeks. Markets are shut on Friday and Monday for holidays on account of Christmas and Moharam.

The benchmark is up 80% in 2009, and on course to log its best yearly gains since 1991. It has outperformed a 71.6 rise in MSCI’s Emerging Market index and a 31.5% rise in the MSCI world equity index.

Telecom majors Bharti Airtel and Reliance Communications closed down on concerns over an intensifying price war, after Reliance said it would charge 20 paise per minute (0.4 U.S. cents) for calls within its network under a new bill plan.

Energy giant Reliance Industries, which has the heaviest weighting in the index, rose for a fourth day and ended up 0.9% at 1,075.20.

Dealers said the stock was catching up after recent underperformance. It is down 2.3% so far in the quarter, while the benchmark is up 1.4%.

In the broader market, gainers outnumbered losers in a ratio of 1.3:1 in a moderate volume of 413 million shares.

The 50-share NSE index rose 0.66% to 5,178.40, its highest close since 5 May 2008.