Sensex up 409 pts on global cues; RIL, IT stocks lead

Sensex up 409 pts on global cues; RIL, IT stocks lead
The Economic Times, November 12, 2009, Page 18

THE Bombay Stock Exchange (BSE) Sensitive Index rallied 2.5% on Wednesday, led by Reliance Industries (RIL) and Infosys Technologies, on renewed optimism about the world economy. Firmer global markets on hopes US interest rates will remain near zero for some time and robust Chinese factory output data helped set the ground for the rise, traders said.

Ajay Parmar, head of institutional equities at Emkay Global, said a weak dollar was encouraging foreign funds to plough cash into emerging markets such as India. Energy giant RIL, which has the heaviest weight on the main index, climbed 2.7% to Rs 2,107.95, taking its gains so far this month to 9.1%. The stock had shed 12.3% in October.

The 30-share BSE index closed up 2.49%, or 409.04 points, at 16,849.60, taking its gains so far in November to 6%. All of its components gained. Foreign funds have moved a net $14.5 billion into Indian stocks so far this year, propelling the benchmark index up nearly three-quarters in the period.

“It is a liquidity-driven rally. The stocks which were hammered are being pulled up,” said Deven Choksey, managing director and CEO of KR Choksey. “It is not that anything is wrong fundamentally, but it’s time to get cautious,” Software companies rose after the ET quoted the president of Nasscom as saying the industry was expected to grow 4-7% in the current fiscal year and return to growth of more than 10% next year.

Top outsourcer Tata Consultancy rose 3.3%, second-ranked Infosys climbed 4.1% and third-ranked Wipro gained 3.9%. Auto companies firmed after October car sales rose the fastest in over two years, bolstering hopes the industry was back on track for robust growth. Tata Motors raced 4.7% to Rs 621.55 while rival Mahindra & Mahindra closed 2.9% higher at Rs 1,032.20. ICICI Bank firmed up 3.4% to Rs 924.65, a day after its chief executive said bad loans had peaked and loan quality should improve.

Metals stocks rose on improving outlook for base metal prices, Mr Choksey said. Sterlite Industries rose 6.5% to Rs 858.05, while Tata Steel and Hindalco climbed 4.3% and 3.9% respectively.

In the broader market, gainers outnumbered losers in a ratio of 1.7:1 on better volume of 425 million shares. The 50-share NSE index closed 2.5% higher at 5,003.95. It closed above 5,000 for the first time since October 21. — Reuters