A stock trader monitors share prices on his terminal at a brokerage house in Mumbai. The benchmark BSE index closed 0.9% higher at 28,693.99 points yesterday.
Reuters
Indian shares hit a record high yesterday, rising for the third straight session, led by gains in lenders such as State Bank of India after the government said it would cut its stake in state-run banks.
The Indian government plans to raise about Rs891.2bn ($14.4bn) by reducing its stakes in state-run banks to 52%, the junior finance minister said yesterday, sending shares of state-run lenders higher.
Overall sentiment was bullish ahead of the economic growth data later in the day and the central bank’s policy review due on December 2.
Overseas investors bought Indian shares worth $424.21mn in the last five straight sessions, putting their total investment so far this year at $15.81bn.
“Sentiments were buoyed by Opec’s decision to sustain their production levels and the subsequent sharp fall in crude prices.
The risk appetite came back and markets are hoping for a rate cut in the RBI policy meeting next week,” said Dipen Shah, head of private client group research at Kotak Securities.
“Going ahead, apart from the RBI meeting, fiscal reforms from the government will be needed for the markets to move higher on a sustainable basis,” he added.
The benchmark BSE index closed 0.9% higher at 28,693.99 points. Earlier in the day, it was up as much as 1.35% to a record high of 28,822.37, surpassing the previous high of 28,541.96 posted on November 24.
The index gained 1.3% in the week, and 2.97% in the month.
The broader NSE index closed 1.11% higher at 8,588.25 points, after hitting a record high of 8,617 points earlier in the day. The index gained 1.3% in the week and 3.2% in November.
State-run banks led the gains with the banking index of the NSE closing up 2.7% and the index for state-run banks up 5.7% after the government’s plans to sell stake in state-run lenders.
State Bank of India closed 5.1% higher, at its highest level since November 2010. Bank of Baroda closed up 7.1% and Punjab National Bank gained 7.4%.
Interest rate-sensitives such as auto companies also gained ahead of the RBI policy.
Mahindra and Mahindra closed 2.4% higher while Tata Motors ended up 2.6%.State-run oil marketing companies and airline stocks rallied after international crude prices hit a multi-year low.
Indian Oil Corp ended up 4.6% while Hindustan Petroleum Corp gained 8.95%.Among airline stocks, Jet Airways surged 20% while SpiceJet ended 18.4% higher.
Shares in Just Dial gained 2.2% after the Reserve Bank of India allowed foreign institutional investors to buy up to 75% in the company.Among the losers, Hindustan Unilever ended 0.5% lower on profit-taking.
The stock had gained 2.6% in the previous session.
Rupee weakens
The rupee weakened yesterday, continuing to fall for a fifth straight week, as the broad rally in the dollar globally and expectations of a cut in interest rates next week hurt sentiment for the local currency.
Investors are now awaiting the release of September-quarter growth data for opening cues next week.
Traders said dollar/rupee forwards have started pricing in a rate cut by the Reserve Bank of India at its policy review on Tuesday despite only 4 out of 45 economists polled by Reuters saying they expect a rate reduction.
“Forwards market and the debt markets are discounting a rate cut next week. In the spot, importers were buying dollars for month-end demand,” said Vikas Babu Chittiprolu, a senior foreign exchange dealer with state-run Andhra Bank.
“About 5% is expected on GDP, so a number below that will prompt the market to look at a rate cut,” he added.
The partially convertible rupee closed at 62.0250/0350 per dollar versus Thursday’s close of 61.8750/8850. On the week, the rupee dropped nearly 0.5%, its fifth straight weekly fall.
On the month, the rupee declined 1.1%.
Hefty gains in the domestic share market also failed to help the rupee gain as foreign fund inflows were easily absorbed by importers looking to meet month-end import commitments.
Shares hit a record high, rising for the third straight session, led by gains in lenders such as State Bank of India after the government said it would cut its stake in state-run banks.
In the onshore forwards, the one-month forward premium dropped to 39.25 points from 41.25 on Thursday while the one-year premiums fell to 436.50 points from previous 445.50 points.
The dollar strengthened on Friday after Opec decided not to cut oil output, slamming commodity currencies like the Norwegian crown, which fell to five-year lows against the greenback and euro.
Most Asian currencies too weakened against the dollar and fell on the month as well.
In the offshore non-deliverable forwards market, the one-month contract was at 62.30, while three-month was at 62.83.