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Mumbai: Indian shares jumped 6.1 per cent yesterday to their highest close in almost three weeks, as financial stocks rallied after an unexpected rise in US home sales eased worries about the world's biggest economy.
Sentiment was also bolstered by JP Morgan's improved bid for stricken Bear Stearns, a move that lifted markets across regions.
The benchmark 30-share index added 6.07 per cent, or 928.09 points, to 16,217.49, its best close since March 5. It was the biggest percentage gain since a 6.6 per cent jump on January 25.
"It's a global phenomena," said R.K. Gupta, managing director at Taurus Mutual Fund. "JPMorgan's offer, which is five times more than the previous one, has improved sentiment for financials and home sales data has given some comfort level."
No 2 lender ICICI Bank and tech bellwether Infosys Technologies rose more than nine per cent each, while top-listed Reliance Industries added 5.2 per cent. The three stocks account for more than 30 per cent of the main index.
Vehicle maker Tata Motors rose 2.7 per cent to a three-week closing high of Rs679.95, ahead of an expected deal this week to buy Ford Motor's brands Jaguar and Land Rover.
In the broader market, 2,066 gainers outpaced 643 losers on volume of 387.2 million shares.
"In India firms like Goldman, Citi and Lehman have become aggressive buyers in the last few days. Some short-covering can also not be ruled out ahead of the [derivatives] expiry," Gupta said.
Monthly derivative contracts expire tomorrow.
The BSE index is still down 20 per cent on the year and 23.5 per cent below a record high of 21,206.77 hit on January 10, after a global equities rout took its toll. "Nightmare may be over soon; dream could take a while," brokerage Kotak Securities said in its India strategy note.
"We find valuations of the Indian market reasonable although potential risk to earnings have emerged in most sectors," it said.
It forecast the index to climb towards a year-end target of 18,000.
Another brokerage, India Infoline, advised clients to use any rally to exit weak stocks. "Liquidity still remains a major concern, resulting in lack of any follow-on buying," it said
Banks
Shares in ICICI Bank rose 9.4 per cent to Rs879.95, while rivals HDFC Bank added six per cent to 1,417.90 and State Bank of India rose 5.8 per cent to Rs1,740.20.
The BSE bank index gained 8.1 per cent.
Reliance Industries rose 5.2 per cent Rs2,314.40 after a company official said it would shut down about 900 petrol stations as subsidised sales by dominant state-run firms makes private outlets unviable.
Software stocks rose on the improving sentiment in the United States, where they get more than half their revenue. Infosys Technologies jumped 9.6 per cent to Rs1,492.55, and Wipro rallied nine per cent to Rs434.70.
Pakistan: Karachi down
Pakistan's benchmark Karachi Stock Exchange 100 Index retreats from a record, falling 59.48 points, or 0.4 per cent, to 15,122.73.
Pakistan Petroleum Ltd, the second-biggest explorer, fell Rs3.95, or 1.5 per cent, to Rs259.75. Pakistan Oilfields Ltd, the No. 3, fell Rs4.40, or 1.2 per cent, to Rs369.60.
Lucky Cement Ltd, Pakistan' biggest maker of the building material, rose Rs2.45, or 1.7 per cent, to Rs138.20. DG Khan Cement Ltd, the second- largest, declined Rs2.25, or two per cent, to Rs110.05.
- Bloomberg
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