Mumbai, July 14: The BSE Sensex rebounded 3.4 percent on Tuesday after four straight falls, riding a global rally as encouraging economic data in Asia and optimism on the financial sector from a prominent U.S. analyst boosted confidence.
Private-sector lender ICICI Bank, energy giant Reliance Industries, and top mortgage lender Housing Development Finance Corp led the gains in the main
index, a day after it fell to its lowest close in two months.
Bullish comments on the financial sector’s performance from Meredith Whitney, who made her name by predicting much of the carnage in the sector, raised hopes U.S. banks’ quarterly results may be stronger than expected, lifting sentiment worldwide.
In Asia, trade-hub Singapore’s economy grew at an annual rate of 20.4 percent in the second quarter, ending a recession after four consecutive quarters of contraction. A key measure of business conditions in Australia jumped to its best level in nine
months in June.
The 30-share BSE index ended up 3.38 percent, or 453.38 points, at 13,853.70, its best close in a week, after rising as much as 3.75 percent during trade. All but one stock advanced.
Monsoon rains, crucial for India’s domestic demand-led economy, had made a weak start in June and early July, triggering worries that a nascent economic recovery may be undermined.
The Meteorological Department said in a forecast on its website on Tuesday that “heavy to very heavy” rain would fall at many regions across India over the next 48 hours, as rains lashed Mumbai and led to minor flooding in several parts of the
country’s financial capital.
“The monsoon rains are looking better than what they were over the past three or four days, and with world markets also gaining, confidence is up,” Ambareesh Baliga, vice president at Karvy Stock Broking, said.
Last week, the market fell 9.4 percent — its biggest fall in eight months — after the government’s budget disappointed investors who were expecting bold economic and financial reforms.
Analysts say investors need patience as key policies are increasingly made outside the budget process.
The finance minister said on Tuesday the economy was showing signs of recovery and the government has to borrow more in 2009/10 to meet its spending needs.
“The market was technically oversold, and today it is bouncing back,” Arun Kejriwal, strategist at research firm KRIS, said.
“It is being driven by the fact U.S. markets were up yesterday, and Asia markets are up today after five days of gloom all over the world.”
In the near term, the performance of overseas markets would determine the direction of Indian shares, traders said.
Asian shares rose on Tuesday, with Japan’s Nikkei gaining 2.3 percent and MSCI’s measure of other Asian markets rose 3.4 percent.
At 1020 GMT, the FTSEurofirst 300 index of top European shares was up 1 percent.
In India, ICICI Bank rose 7.6 percent to 679.80 rupees, and engineering and construction conglomerate Larsen & Toubro gained 3.2 percent to 1,372.70 rupees.
Reliance Industries, India’s largest-listed firm with the most weight in the main index, climbed 3.6 percent to 1,811.20 rupees, and Housing Development Finance Corp advanced 7.3 percent to 2,368 rupees.
In the broader market, gainers led losers by more than 3 to 1 on relatively light volume of 315.8 million shares.
The 50-share NSE index rose 3.46 percent to 4,111.40.
“This may turn out be just a temporary bounce-back, as there are going to be no domestic triggers for the market to continue going up this week,” Karvy’s Baliga cautioned.
MAIN TOP 3 BY VOLUME
* Suzlon Energy on 16.8 million shares
* Unitech on 15.8 million shares
* Reliance Natural Resources on 10.3 million shares
—-Agencies