Wednesday indian shares rose for the next consecutive trading session, with the Nifty index moving the 6000 tag for the very first time in virtually 2 yrs in hopes the central bank will trim interest rates later this month.
Sentiment also got an increase from benefits in other marketplaces in European countries and Asia, that have been closed for the brand new Year vacation on Tuesday.
Dealers said Indian shares have already priced in economic policy actions by the Indian authorities and the U.S., which reached an agreement on averting the “fiscal cliff” late Tuesday, and are now waiting for moves on interest rates.
The Bombay Stock Exchange’s 30-stock Sensitive Index closed 133.43 points, or 0.7%, higher at 19714.24. It last closed above this level on Jan. 06, 2011.
On the National Stock Exchange, the 50-share Nifty rose 42.40 points, or 0.7%, to 5993.25, off its intraday high of 6006.05. The Nifty last closed above this level on Jan. 5, 2011.
“The trend seen earlier in corporate earnings downgrades has stopped, and we are expecting over 14% growth in corporate earnings for another financial year,” said Rikesh Parikh, vice president at Motilal Oswal Securities.
Mr. Parikh stated Motilal Oswal can be factoring in a complete percentage point lower in benchmark rates of interest this season, with the first lower likely to arrive at the Reserve Lender of India’s monetary plan meeting on Jan. 29.
The RBI last cut rates – by half a percentage point to 8% – in April.
Mr. Parikh said the benchmark stock indices are trading at 14 times forward corporate earnings, and stocks are likely to trade at higher multiples if lower rates help push up earnings in the next few quarters.
Shares in the banking, realty and the auto sectors, which have emerged as a few of the main beneficiaries of lower prices, gained Wednesday.
ICICI Lender 532174.BY +1.51% closed up 1.2% at 1,172.95 rupees, while Condition Bank of India 500112.BY +1.09% rose 0.9% to 2,448.10 rupees.
Mortgage firm Housing Advancement Financing closed 1.5% higher at 845.90 HDFC and rupees Bank HDB +1.38% rose 0.4% to 687.10rupees.
Bajaj Auto rose 3.1% to 2,202.60 rupees, while Maruti Suzuki India 532500.BY +2.74%was up 2.7% at 1,557.70 rupees.
Software stocks were among the few losers, on concerns about economic conditions in the U.S. and Europe, their main export markets.
Infosys 500209.BY -0.21% ended down 0.03% at 2,307.60 rupees, Wipro was off 0.8% at 393.75 rupees, and Tata Consultancy Services 532540.BY -0.07% was down 0.1% at 1,262.65.
Consumer staples, usually favored as defensive plays during times of uncertainty, were hit by profit-taking.
Cigarette maker ITC was 0.6% lower at 285.50 rupees, while Hindustan Unilever500696.BY +0.05% was 0.1% down at 529.85 rupees.