MUMBAI/Singapore: India’ s stock benchmark rose the most in two months, led by Jaiprakash Associates Ltd, the nation’ s largest builder of dams.
The rally was driven by on strong institutional buying after a Wall Street rally led to a surprise rebound in existing home sales in the US, dealers said.
The Bombay Stock Exchange’s Sensitive Index, or Sensex, advanced 928.09 points, or 6.1%, to 16,217.49, its steepest rise since January 25. The Sensex added 9.5% in the past four trading sessions.
The Sensex has fallen 20% this year after adding 47% in 2007, its sixth consecutive annual rise. The S&P CNX Nifty advanced 267.55, or 5.8%, to 4,877.5 points.
Jaiprakash gained after selling a stake in a unit to ICICI Bank Ltd, a month after failing to secure funding for the division. Reliance Energy Ltd rose the most in more than two months after it began buying back stock.
“The deal is positive for Jaiprakash as it helps formulate a value for its subsidiary,” said Rajesh Jain, chief executive officer at Pranav Securities Ltd Purchases by foreign investors also lifted stocks, he said.
It is the first time this year that the index has risen for four consecutive days. Three stocks advanced for each that fell on the exchange.
Overseas funds bought equity derivatives worth a net Rs18bn ($448mn) on Monday and made purchases of Rs19bn on Wednesday, according to data from the National Stock Exchange.
Banks also gained, tracking financial stocks across Asia, after JPMorgan Chase & Co raised its bid for Bear Stearns Co. JPMorgan quadrupled its offer for Bear Stearns and struck a deal to buy a 39.5% stake without a shareholder vote. Bear Stearns surged 89% in New York yesterday.
“Given stable overseas markets, the Nifty should be able to touch 5,000 points and then cross the 5,100 mark in the next 10 days,” Sudarshan Sukhani, who uses historical data to estimate future moves, said at Technical Trends.
Jaiprakash surged Rs32.8, or 16.4%, to Rs233.1, its steepest percentage rise in more than 16 months.
ICICI Bank, the nation’ s second largest by assets, advanced Rs75.4, or 9.4%, to Rs879.95, its biggest gain since January 25.
The rupee rose for the fourth day, its longest winning streak in more than two months, on speculation a rally in local stocks attracted overseas funds.
The currency closed at the highest level this month as the latest data showed overseas investors bought more Indian shares than they sold for the first time in five days.
“The trend suggests confidence in equities is strengthening, particularly those in emerging markets,” said Agam Gupta, head of trading at Standard Chartered Plc in Mumbai. “That will increase investment in equities and dollar purchases will probably be deferred. So, the rupee should gain further.”
The rupee climbed 0.4% to 40.12 per dollar at the 5pm close in Mumbai, according to data compiled by Bloomberg. It may touch 40 this week, Gupta said.
Meanwhile, Lehman Brothers Holdings yesterday lowered its forecasts for the Korean won, Indonesian rupiah, Philippine peso and Indian rupee, saying these countries’ current-account positions were not as favorable as those of Taiwan, Malaysia and Thailand.
Korea’s won will trade at 1,030 per dollar by the end of the second quarter, Lehman said, compared with an earlier forecast of 950. The rupiah will fetch 9,200, compared with a previous estimate of 9,130, the peso will trade at 42, from 39.80.
India’s rupee will be at 40 per dollar, from an earlier forecast of 38.70.
Lehman raised its forecasts for the Taiwan dollar, Malaysian ringgit and Thai baht saying current-account surpluses will enable them to withstand a US recession better than other Asian currencies.
The Taiwan dollar is the best performer this year of the 10 most-active currencies in Asia outside Japan. – Bloomberg