Reuters
Mumbai
Indian shares edged up yesterday, gaining for a fourth session in five, led by blue chips on continued hopes the central bank would follow other countries such as Japan and China in easing monetary policy to boost economic growth.
However, gains were capped, with indexes staying below record highs hit on Tuesday, as caution prevailed ahead of the expiry of monthly derivative contracts due today as well as the release of July-September economic growth data on Friday.
The Reserve Bank of India holds its policy review on Tuesday amid growing expectations it could cut interest rates after a sharp fall in consumer inflation.
Any rate cut would come amid growing expectations the European Central Bank will unveil more monetary stimulus, after the Bank of Japan last month stunned markets by expanding its massive stimulus spending.
“The sentiment is positive. The market is awaiting an ‘investor friendly’ policy from the central bank, which will help to continue the momentum,” said Suresh Parmar, head, institutional equities at KJMC Capital Markets.
“However, volatility is likely to be higher in the next few sessions ahead of expiry and various data announcements.”
The benchmark BSE index gained 0.17% to 28,386.19, while the broader NSE index closed 0.15% higher at 8,475.75.Blue chips led gains on expectation of stimulus measures. Mahindra and Mahindra rose 1.3%, while Hero Motocorp closed 1.9% higher.
Other interest rate-sensitive stocks such as real estate companies also gained. DLF closed 7.2% higher, while Unitech advanced 4.4%.
ITC, which fell 5.2% in the previous session on the government’s move to ban the sale of unpackaged cigarettes, gained 2.3% as analysts said the rule would have limited impact.
Financial Technologies rose 4.7% after it sold its stake in MCX-SX for Rs884.19bn ($14.30bn) to well-known investor Rakesh Jhunjhunwala.
Infrastructure stocks rose after the central bank governor said India could give banks more flexibility to restructure distressed loans in a bid to steer funding towards cash-strapped infrastructure projects.
Among losers, Bajaj Auto closed down 1.1% and Bharti Airtel fell 2.5% after Nigeria’s central bank devalued the naira by 8% and raised interest rates sharply on Tuesday.
Rupee ends marginally stronger
The rupee closed marginally stronger yesterday after being held in a tight range as dollar inflows into the domestic share markets were offset by demand for the greenback from importers looking to meet commitments.
Sentiment was also cautious ahead of the release of July-September economic growth data on Friday and the Reserve Bank of India’s monetary policy review on December 2.
India economic growth probably slowed to 5.1% in the July-September quarter from a year ago, but economists polled by Reuters doubted whether that would be enough to persuade the central bank to cut interest rates just yet.
“We are likely to see the rupee in a 61.70 to 62.10 range this week as rising dollar demand towards month-end may hurt the rupee,” said Param Sarma, director and chief executive officer at NSP Forex, a consultancy firm.
The partially convertible rupee closed at 61.8450/8550 per dollar versus Tuesday’s close of 61.86/87. Moves in the domestic share market will also be crucial for cues on foreign fund flows.
