Indian shares rise 2nd day, Sensex rises 1.7 per cent
Indian shares recovered for a second day, rising 1.7 percent on Thursday, with firmer global markets underpinning sentiment but investors were circumspect about euro zone debt woes and foreign fund withdrawals.business Updated: May 27, 2010 16:35 IST
Indian shares recovered for a second day, rising 1.7 percent on Thursday, with firmer global markets underpinning sentiment but investors were circumspect about euro zone debt woes and foreign fund withdrawals.
Financials led the gains after the market started shakily and traders said there was short covering before the expiry of monthly derivatives contracts on the National exchange.
Tata Motors raced 4.7 percent to 742.90 rupees, ahead of its results. After the market closed, the top vehicle maker posted a consolidated net profit of 25.71 billion rupees ($544 million) for its financial year ended March, beating forecasts on rising sales and improved profitability of its Jaguar and Land Rover unit.
The 30-share BSE index rose 278.56 points to 16,666.40, with 26 of its components gaining, but is down 5.1 percent this month.
"It is difficult to predict what happens next. It depends on how things shape up globally," said Jigar Shah, vice-president of equity sales at brokerage Motilal Oswal.
"The monsoon should be an important factor on the domestic front. Corporate results were more or less in line," he added. The annual rains, vital for farm and growth in Asia's third-largest economy, have not advanced for the past six days but weather officials said it was still not a reason for worry.
Foreigners have withdrawn $2.3 billion from Indian equities so far in May in their biggest pullout since October 2008, as the deteriorating fiscal health in Europe prompted investors to dump riskier assets.
"We do not know whether the correction is over, but we do know that corporate earnings growth and corporate balance sheets are far healthier today than they were in 2008," BNP Paribas said in a note.
The benchmark index's drop has been far less than the broader MSCI's measure of Asian shares other than Japan that has lost 15 percent so far in May.
The People's Bank of China said a Financial Times report that the State Administration of Foreign Exchange was concerned about its exposure to the euro zone debt crisis was groundless, soothing investor sentiment.
The Chinese central bank said Europe would remain one of China's main investment markets and Beijing would support actions to help the European Union resolve its debt crisis.
Financials climbed on hopes for a pick-up in loan demand in an advancing economy. Top lender State Bank of India rose 2 percent while rivals ICICI Bank and HDFC Bank climbed 1.1 percent and 3.8 percent respectively.