Shares bounce back; financials lead

Shares bounce back; financials lead

Mumbai: Shares recovered from the previous session’s losses and firmed 1.9% on Monday, supported by world equities on the back of Irish rescue deal, but investors eyed further developments on the corruption scandals.

Financials led the gains on optimistic loan demand outlook in the world’s second-fastest growing major economy after China.

An agreement from the European Union and the International Monetary Fund to lend Ireland cash to tackle its banking and budget crisis gave investors a reason to buy back some risky assets sold off this month.

The BSE 30-share index Sensex gained 1.9%, or 372.15 points, to 19,957.59, with 27 of its components closing in the green.

“The market is just recovering from a sharp fall on Friday. Strong global stocks and Ireland’s bailout decision are helping," said Neeraj Dewan, director of Quantum Securities.

The benchmark index had dropped 1.7% on Friday to its lowest close in nearly two months.

“There were fears about political upheaval over the weekend, which have subsided to an extent, providing some relief to the (stock) market today," said Ambareesh Baliga, vice-president of Karvy Stock Broking.

So far in 2010, foreign funds have pumped in $28.4 billion into Indian equities, helping the benchmark index gain 14.3%.

But, data from market regulator suggests a slowdown in foreign funds’ investments recently as they turned net sellers in three of four sessions ending Thursday.

The government and opposition parties failed to break a deadlock in Parliament over an investigation into the 2G spectrum scandal that has prevented economic reforms being approved.

Top lender State Bank of India rose 1.6% while leading private lenders ICICI Bank and HDFC Bank firmed 2.7% and 3% respectively.

Energy major Reliance Industries rose 1.5% after it said late Friday it has safely restarted its crude distillation unit at its Jamnagar refinery.

Tata Motors gained 3.2% after the vehicles maker said late Friday it would start selling its small car Nano in six more states from 22 November.

Gainers outnumbered losers in a ratio of 1.9:1 in the broader market, in a low trading volume of 339 million shares.

The NSE 50-share index Nifty gained 2% to 6,010 points.

Elsewhere, MSCI’s all-country world stock index rose 0.5% by 1027 GMT while its more volatile emerging market index firmed 0.7%.