Markets extend gains to 2% on global rally

Markets extend gains to 2% on global rally

Mumbai: Indian shares extended gains to 2% on Wednesday afternoon, with financials leading the rise, taking cues from strong global peers.

At 2:38pm, the 30-share BSE index was up 2% at 16,343.28 points, with 25 components advancing. The 50-share NSE index was up nearly 2 percent at 4,901.75.

Markets clawed up 1.5% after skidding to their lowest close in three-and-a-half months in the previous session, with firmer Asian peers helping soothe investor nerves.

Financials and energy major Reliance Industries that had fallen sharply on Tuesday led the recovery, but doubts remained about the euro zone’s fiscal health and rising withdrawals by foreign institutional investors.

By 10:08am, the 30-share BSE index was up 1.46% at 16,256.55 points, with 28 of its components gaining. It had dipped below 16,000 on Tuesday for the first time since early February. The 50-share NSE index was up 1.5% at 4,877.40

“The recovery that we are seeing could be fragile and it remains to be seen if it can last," said Gajendra Nagpal, CEO of Unicon Financial. “The deluge of selling from FIIs will weigh."

Foreign funds have taken out nearly $2 billion so far in May as risk aversion intensified due to the debt woes in Europe, and largely contributed to a 7.4% drop in the benchmark index during the same period.

The banking sector index was up nearly 2% after falling 2.6% on Tuesday.

State Bank of India, which dominates the country’s banking, rose near;y 1%, while rivals ICICI Bank and HDFC Bank gained 2.7% and 2.3% respectively.

Reliance Industries, which has the highest weight on the Sensex, climbed 1.3% to Rs1,000.

Mahindra & Mahindra rose 2.6% after a source told Reuters the utility vehicle maker is set to announce on Wednesday it is buying a stake in an electric car company.

Tata Steel, which is expected to release consolidated 2009/10 earnings after market hours, was up 1.7% at Rs486.65.

A Reuters survey of six brokerages had forecast a net loss of Rs2,570 crore for the world’s eighth-largest steelmaker on net sales of 1.04 trillion.

Other metal makers such as Sterlite and Hindalco rose 2.4% and 1.8% respectively as base metal prices firmed in Shanghai and London.

In the broader market, gainers were nearly thrice the number of losers on volume of 52 million shares.