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    Default Sensex rises over 1 pct led by financials

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    The BSE Sensex rose more than 1 percent on Friday, on course to log its seventh consecutive weekly rise, buoyed by strong foreign fund inflows and firm overseas markets after indications euro zone officials would soon approve a bailout for Greece.

    The country's top lenders State Bank of India and ICICI Bank were among the biggest gainers, fuelled by improved credit demand outlook amid hopes of interest rate cuts by the central bank.

    The main 30-share BSE index .BSESN was up 1.1 percent at 18,345.75 by 10:51 a.m. with all but six of its components rising. It earlier rose as much as 1.5 percent to its highest level in more than five months. "The liquidity flow is strong in the market that few people are paying attention to fundamentals that doesn't seem to have changed much," said Ambareesh Baliga, chief operating officer at Way2Wealth.

    The BSE index is up nearly 19 percent this year, bolstered by surging overseas portfolio investments. Foreign investors have bought shares worth about $4.4 billion so far this year, after pulling our more than $500 million in 2011. Citigroup said in a research report that the rally was mainly driven by overseas inflows with "relatively little evidence" of retail participation, though the domestic economy or the corporate sector outlook has not changed much.

    The Indian economy has lost momentum as lingering euro zone debt woes coupled with high domestic interest rates and a policy paralysis at home have hit capital investments by companies reeling under slowing growth. The government earlier this month cut the economic growth forecast for the current fiscal year to 6.9 percent, the slowest pace in three years. The GDP data for the October-December quarter is due on February 29.

    "We argue that while the macro and the market have moved favorably - the economy/corporate sector have to play catch up, and deliver in earnings, investment, expansion and risk appetite," Citigroup analysts wrote in the research note. "We like this rally ... but such sharp, liquidity backed and 'going with the flow' kind of investor and inflow momentum can be a scary thing," they said, adding the brokerage retained its year end BSE index target of 18,400 despite the current rally.

    Shares of financials are among the biggest gainers this year, as the Reserve Bank of India (RBI) is widely expected to start cutting interest rates in the quarter beginning April 1 to stimulate the economy. The central bank ran a 20-month interest rate tightening cycle until October to slow down inflation, hitting credit demand and asset quality of banks.

    State Bank of India was up 4.6 percent at 2,459 rupees and ICICI Bank gained 2.3 percent to 990.40 rupees on Friday on fresh buying by institutional investors, dealers said. The sector index was up 2.2 percent.

    Industrials such as Bharat Heavy Electricals Ltd was trading up 9.7 percent at 312.20 rupees and Larsen & Toubro surged 2.5 percent to 1,484 rupees, as investors bet on rise in orders on higher investments by sectors like power. NTPC Ltd plans to award $3.25 billion of equipment order by March-end after a ruling by India's top court settled a case with a bidder in favour of the country's top power producer, its Chairman said on Thursday.

    The broader 50-share NSE index was up 1.28 percent at 5,592.40 points. In the broader market, there were nearly 5 gainers for every loser on relatively strong volume of more than 376 million shares.

    Stocks on the move
    * Man Industries Ltd was up 3.7 percent at 113.50 rupees after the company said it got orders worth 5 billion rupees, taking the total order book to 16 billion rupees.
    * Adhunik Metaliks rose 5.2 percent to 57 rupees after the Economic Times reported on Friday that the steel manufacturer is in talks to sell its forging arm to Amtek Auto for 2.3 billion rupees.

    Main top 3 by volume
    * Lanco Infra on 96 million shares
    * GVK Power on 18 million shares
    * IFCI on 16 million shares

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    Feb 2012






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