News Room - Business/Economics

Posted on 10 Sep 2009

Indian shares double from 2009 low; resistance seen

Indian shares rose for a third session on Tuesday and helped double the gains in the main index from a 2009 low in March, as emerging markets climbed to a year high on growing global investor confidence.

 

Signs of industry revival and expectations for strong quarterly earnings underpinned the market, but traders said fatigue could set in and there was talk prices may have risen too fast.

 

The 30-share BSE index .BSESN rose 0.67 percent, or 107.35 points, to 16,123.67 -- its highest close since May 30, 2008, with half its constituents gaining.

 

 The benchmark has gained 67 percent so far this year and has more than doubled from its March low of 8,047.17.

 

Amitabh Chakraborty, president of equities at Religare Capital, said a correction of 5-10 percent by the end of October could be possible.

 

“In March, when we had touched lows, there were no expectations. So, every positive news surprised the market," he said. "Now, there are a lot of expectations and it is difficult to surprise the market positively."

 

 The market's strong rally despite worries an erratic monsoon will slow down economic growth is causing unease.

 

 "The concern is we are just rising too soon, too fast," said Nilesh Doshi, president of equity research at Techno Shares and Stocks. "Fundamentally, we are overstretched at

current levels."

 

 State Bank of India chairman said earnings at the country's largest lender was seen rising 30-35 percent in the current quarter, with retail loans growing at about twice  the pace from the year earlier.

 

 Its shares closed 4.4 percent higher at 1,894.15 rupees.  

 

 The domestic industry is showing signs of revival and foreign investors are also returning, a junior finance minister said on Tuesday.

 

 Metal producers climbed, supported by strong base metals and steel prices in global markets, dealers said.

 

 Tata Steel, Sterlite Industries and Hindalco Industries rose between 3.2 percent and 6.1

percent.

 

 Engineering and construction firm Larsen & Toubro firmed 1.3 percent to 1,617.50 rupees. Its financial services unit is in talks to buy Cholamandalam DBS Finance's

domestic mutual fund operation, sources told Reuters late on Monday

 

 Cholamandalam DBS was up 9.9 percent at 69.65 rupees.

 

 Energy giant Reliance Industries (RELI.BO), which has the most weight in the main index, rose 3.7 percent to 2,075.15 rupees.

 

 Tata Consultancy Services (TCS.BO) closed 0.7 percent higher at 553.80 rupees, extending gains from the previous day after the top software services firm's CEO said on Monday its demand pipeline was good.