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Mumbai: Indian shares rose 6.62 per cent yesterday, their biggest daily rise in more than a year and a half as investors snapped up beaten-down blue chips, but the market still ended a turbulent week down 3.4 per cent.
The benchmark BSE 30-share index added 1,139.9 points, to 18,361.66, with all its components gaining. It overtook Wednesday's 5.17 per cent jump was the index's biggest daily gain since June 15, 2006 when it rose 6.89 per cent.
The index still ended lower for a second successive week, unable to fully recover from a brutal selloff that saw it post intra-day falls of more than 10 per cent on Monday and Tuesday.
Banks and real estate stocks gained as investors rode a rally in global equities on optimism that a US recession might be avoided and hopes the Reserve Bank of India would cut interest rates at a policy review on Tuesday.
"It was a strong bounce-back on global cues," said Shahina Mukadam, head of research at IDBI Capital Market Services in Mumbai. "We have had very strong numbers coming in from State Bank of India and that has really driven up sentiment in the sector. There is an expectation that at least interest rates will soften in India also."
Scepticism
However, lower-than-normal volumes due to a bank strike and heavy selling by foreigners raised doubts about whether the rise, only the second in the last 10 days, was sustainable.
"I think the next move will depend on the Reserve Bank's move on rates. If there is any positive signal on that front, my feeling is that we could see a very good bounce-back," said Dipak Acharya, a fund manager at BoB Mutual Fund.
"Global markets also seem to have found some support. But we will track our economic data more than the global markets in the next few days."
Seven of 13 analysts polled by Reuters expect the central bank to cut its repo rate by 0.25 per cent on Tuesday.
Shares in ICICI Bank, the largest private bank, gained 11.2 per cent to Rs1,259.25, and sector leader State Bank of India was up 2.5 per cent after beating forecasts with a 70 per cent rise in quarterly profit.
"Many people are not trading (yesterday) because of the bank strike. So the only saving grace I can see from this rally is derivatives traders will see their positions improving and they will be able to square off at least," said Arun Kejriwal of research firm KRIS.
Foreign funds, which bought a record $17.4 billion of shares in 2007, sold $3.2 billion in the six sessions to Wednesday, including $620 million on Wednesday.
Expectations of lower rates and good earnings figures this week helped real estate firms, with DLF rising 5.9 per cent and Unitech surging 17.8 per cent.
Shares in infrastructure play Larsen & Toubro rose 10 per cent to Rs3,890.40, with investors seeing the stock as one able to weather any global slowdown.
In the broader market, 1,558 gainers beat 1,167 losers on a thin volume of 279.5 million shares.
The 50-share NSE index surged 6.95 per cent to 5,383.35.
- With inputs from Bloomberg
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