Markets rebound; Sensex recovers 296 pts at closing
Indian shares rose 2 per cent on Wednesday as investors scooped up bargains after the market had hit a 2008 low the previous day, while drug maker Ranbaxy was driven by a takeover bid from Japan's Daiichi Sankyo.
Ranbaxy Laboratories Ltd, India's leading drug maker by sales, raced to a 3-1/2-year high after Daiichi Sankyo struck a friendly deal worth up to $4.6 billion to take majority control.
The stock, however, ended little changed at Rs 560.80 after rising as high as 592.70, as Daiichi said it would only buy up to 20 per cent from public shareholders at Rs 737 each, the price it agreed to pay the founders of Ranbaxy.
Traders said this meant only about a third of the public float would be accepted at the tender.
The 30-share BSE index ended up 1.99 per cent, or 296.07 points, at 15,185.32 points, with 22 components in the positive zone. It had gained as much as 2.3 percent during trade after falling 4.4 percent in the previous two days.
"The market was clearly getting oversold and even pure growth stocks with good earnings visibility were getting battered. There was lot of short-covering today in some of these stocks," said Neeraj Dewan, director at Quantum Securities.
In the broader market, 1,827 gainers were ahead of 812 losers on volume of nearly 268 million shares.
"I don't see too much of an upside from here because the macro situation is not that good. The worries about inflation and growth have not gone away completely," Dewan said.
The index, which fell to 14,645.31 during trade on Tuesday, its lowest since Aug. 29, 2007, is 22.3 percent down in 2008.
The Ranbaxy deal lifted the shares of group companies, as traders speculated the founders would invest in these firms.
Group firms Fortis Healthcare Ltd rose 18.4 per cent to Rs 80.85, Fortis Financial Services Ltd gained 10 per cent to Rs 81.15 and brokerage Religare Enterprises added 8.5 per cent to Rs 421.60.
Zenotech Laboratories Ltd, a drug maker controlled by Ranbaxy, jumped 20 per cent to Rs 112.95, after Daiichi said it would make an open for up to 20 per cent.
India's biggest listed firm, Reliance Industries, led the gains among index stocks rising 2.8 per cent to Rs 2,260 ahead of its annual shareholders meet on Thursday when it is expected to announce a slew of business initiatives.
Banking and financial stocks, which had been hit on concern higher rates would slow demand for loans, also pulled back with top mortgage firm Housing Development Finance Corp up 4.1 per cent at Rs 2,187.05 while HDFC Bank gained 4.7 per cent to Rs 1,184.55.
No 2 lender ICICI Bank rose 1.9 per cent to 745.25 rupees, while bigger rival State Bank of India gained 3 per cent to 1,317 rupees.
The broader 50-share NSE index rose 1.66 per cent to 4,523.60.
Elsewhere in the region, Karachi's 100-Share index climbed 1.07 per cent to 13,016.38, but Colombo's All-Share index fell 0.58 per cent to 2,474.93.