Mumbai, September 17: The BSE Sensex eked out a 0.2 percent gain on Thursday, with strengthening hopes for a global recovery countered by resistance after a run up to 16-month highs.
Reliance Industries Ltd, which has the heaviest weight in the main index, fell 4.45 percent to 2,086.35 rupees after the energy giant sold 15 million shares at a discount to its Wednesday close, raising about $660 million.
It was the biggest one-day fall in a month for the company, and weighed on the index’s rise.
The market’s gains were also slowed by a surge in food prices, which drove the country into inflation faster than expected. This could put pressure on the central bank to speed an exit from easy monetary policy.
The wholesale price index rose by 0.12 percent in the year to Sept. 5, its first increase since late May. The food articles sub-index climbed an annual 15.4 percent from the previous week’s 14.8 percent rise as a dry spell parched nearly half of India’s districts, hurting summer crops.
The 30-share BSE index gained 0.2 percent, or 34.07 points, to 16,711.11, its highest close since May 22, 2008. Twenty-two of its components climbed.
Traders said excess cash pumped by world economies was flowing into emerging markets such as India, but there were concerns about the market becoming pricey.
“It is money allocation that is driving the stocks up,” said Sanjeev Patkar, director of research at Dolat Capital. “Fundamentals are not really at play. It is purely a
demand-supply game.”
The benchmark index has risen over 73 percent so far this year, driven by foreign portfolio inflows of $9.1 billion. In 2008, the index had slumped by half after foreigners pulled out more than $13 billion.
“The valuations are starting to look overstretched. People are trading and not investing,” said Nilesh Doshi, president of equities at Techno Shares.
Top lender State Bank of India climbed 0.8 percent to 2,106.70 rupees and rival ICICI Bank firmed 0.6 percent to 872.55 rupees, extending gains on hopes for higher quarterly earnings.
Shares in cement makers Grasim and ACC rose 2.9 percent and 3.7 percent respectively, on expectations their sales will rise as construction activity picks up, analysts said.
Goldman Sachs said in a report it expected returns on private investment in Indian infrastructure would rise on the back of increasing returns to scale and falling costs, as well as critical policy changes.
Metals stocks Hindalco climbed 3.6 percent to 136.05 rupees and Sterlite Industries gained 0.1 percent to 771.95 rupees on strong growth hopes.
But Tata Steel fell nearly 2 percent on profit taking after having risen 8.2 percent in the previous session.
In the broader market, losers led gainers in the ratio of 1.3:1 on relatively good volume of 593 million shares.
Shares rallied across the globe, pushing the benchmark world index to a fresh 11-month high.
MAIN TOP 3 BY VOLUME
* Kingfisher Airlines on 23.8 million shares
* Spicejet on 21.8 million shares
* NHPC on 16 million shares
STOCKS THAT MOVED
* Raymond Ltd was limit up 10 percent at 204.85 rupees after the textile firm said its board approved starting realty development as a new business.
* Orchid Chemicals & Pharmaceuticals Ltd closed 3.3 percent higher at 163.05 rupees, extending the previous session’s quarter percent jump on U.S. approval for its generic antibiotic in injection forms with a 180-day marketing exclusivity.
* Power generation services provider Alstom Projects India rose 4 percent to 544.55 rupees after its consortium won a contract worth 5.63 billion rupees to supply signalling equipment and services to the Bangalore Metro Rail Corp.
—-Agencies