Mumbai, July 15: The BSE Sensex rallied 2.9 percent on Wednesday, its second consecutive rise, as upbeat results from U.S. firms Goldman Sachs and Intel helped shore up investor confidence worldwide.
Traders said higher start for European bourses boosted investor appetite for riskier bets after the market appeared to lose steam due to concerns about the domestic economy and rich valuations.
State-run power equipment maker Bharat Heavy Electricals extended gains after the finance secretary said the government would announce plans to sell small stakes in state firms in 3 to 4 weeks.
“BHEL has received a few orders in the past few days, and these hopes for divestment is driving the stock further,” Alex Mathew, head of research at Geojit BNP-Paribas Financial Services, said.
Engineering and construction firm Larsen & Toubro, energy giant Reliance Industries and private-sector lender ICICI Bank powered the main index a day after it rose 3.4 percent, the best in almost 7 weeks.
“We saw some buying by institutions in the latter half of the day, as well as a significant amount of short-covering,” Mathew said. “The volume was also more in the afternoon.”
The 30-share BSE index ended up 2.88 percent, or 399.54 points, at 14,253.24, its highest close in nearly two weeks, with 29 stocks advancing.
But traders said the market may not be able to sustain gains in the near term, with profit-taking set to emerge unless investors are reassured corporate earnings growth will pick up pace in the next few quarters.
Last week, the market fell 9.4 percent — its biggest weekly fall in eight months — after the government’s budget disappointed investors who were expecting bold economic and financial reforms.
“The market is still finding it difficult to attract liquidity, and in the absence of any domestic triggers, there is still downside risk even though we are up now due to international markets,” Harendra Kumar, head of research at Centrum Broking, said.
However, the benchmark index is set to gain another 12 percent by the end of 2009, taking its rise for the year to 60 percent, as an economic revival boosts corporate earnings and attracts liquidity, a Reuters poll showed.
Larsen rose 4.2 percent to 1,430.15 rupees, while Reliance Industries, which has the most weight in the main index, climbed 3.5 percent to 1,875 rupees.
ICICI Bank advanced 2.5 percent to 696.45 rupees, Bharat Heavy Electricals added 6.3 percent to 2,176.05 rupees and State Bank of India gained 3.2 percent to 1,633.90 rupees.
In the broader market, gainers led losers by more than 3.5 to 1 on moderate volume of 417.6 million shares.
The 50-share NSE index ended up 3 percent at 4,233.50.
Asian shares were higher, with Japan’s Nikkei rising 0.1 percent, while MSCI’s measure of other Asian markets firmed 2.8 percent.
At 1023 GMT, the FTSEurofirst 300 index of top European shares was up 1.6 percent and futures pointed to a higher start on Wall Street.
MAIN TOP 3 BY VOLUME
* Reliance Natural Resources on 19.2 million shares
* Suzlon Energy on 18.3 million shares
* Unitech on 14.7 million shares
STOCKS THAT MOVED
* Infotech Enterprises Ltd surged 15 percent to 202.80 rupees after the engineering software services firm said its April-June net profit more than doubled.
* Adani Enterprises Ltd rose 7.7 percent to 801.10 rupees on hopes for a strong response for unit Adani Power’s initial public offer, which opens on July 28, dealers said.
The unit is likely to raise $500 million to $600 million in the IPO, three sources told Reuters on Wednesday.
—-Agencies