Wednesday July 23, 02:00 PM
Indian shares rise 5 pct on reform hopes after win |
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MUMBAI (Reuters) - Indian shares extended gains to more than 5 percent on Wednesday, with financials such as ICICI Bank leading the rally after a victory for the government boosted hopes for revival of stalled economic reforms.
Traders said an emboldened government may now try to push through banking, insurance and pension reforms such as easing foreign investment limits and allowing higher private participation.
"This is the first time (in the last four years) that the central government would be in office without the support of the Left parties, presenting an opportunity to push some of the pending reforms," UBS said in a research note.
At 1:42 p.m., the 30-share main index, was up 5.14 percent, or 724.62 points, at 14,828.82.
The benchmark was led by financials after Finance Minister Palaniappan Chidambaram said the government would work with other parties to push reforms, and senior officials said foreign investment limits in private banks and insurance firms were on the agenda.
Shares in No. 2 lender ICICI Bank rallied as much as 11.9 percent to 740.10 rupees, while the bank index gained 9.3 percent.
The government's win in a confidence vote late on Tuesday also cleared the way for a civilian nuclear deal with the United States, which was opposed by its left allies and resulted in the parliamentary test.
Power equipment makers such as Bharat Heavy Electricals and Larsen & Toubro and utilities rose on expectation the U.S. tie-up would bring in orders for nuclear power plants.
Bharat Heavy was up 9.2 percent at 1,743,75 rupees, its highest since May and Larsen rose 4.5 percent to 2,686.80 rupees.
Utilities Reliance Power firmed 10.5 percent to 157.65 rupees, its highest in a month, while Tata Power gained 4.8 percent to 1,161.50 rupees and state-run NTPC added 2.7 percent to 190 rupees.
Sanjeev Patkar, head of research at Dolat Capital said, the focus on politics would soon give way to fundamentals such as earnings, inflation and monetary policy.
Reliance Industries, the biggest company by market value, was up 3.6 percent at 2,231.55 rupees, ahead of its earnings on Thursday.
With annual inflation expected to hit more than 12 percent in mid-July, traders were circumspect about what India's central bank would do at its quarterly review on July 29.
In the broader market, 2,176 gainers swamped 411 losers on volume of 269 million shares. The BSE index had gained 12.2 percent in the previous four sessions, but is down 27 percent in so far 2008.
The 50-share NSE index rose 4.9 percent to 4,449.35 points.
Sesa Goa Ltd rose 8.1 percent to 3,110 rupees, after the top private-sector iron ore exporter's quarterly profit jumped more than five times to 6.4 billion rupees, beating analysts' forecasts of 4.1 billion rupees.
Siemens Ltd gained 6.6 percent to 532.10 rupees, after the power equipment and services firm's net profit for the June quarter more than doubled to 1.69 billion rupees and it reported more new orders.
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