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Bangalore: Indian shares rallied 2.1 per cent yesterday to their highest close in two months, led by gains in Reliance Industries, after the central bank tightened cash conditions but kept all other rates unchanged.
Top lender State Bank of India gained 3.3 per cent to Rs1,793.50, while privately run HDFC Bank ended nearly two per cent higher at Rs1,547.50, as the central bank's rate decision calmed worries about loan growth.
The bank sector index added 1.7 per cent.
India unveiled a series of measures yesterday to tame inflation and secure food supplies, including the central bank's second move this month to drain liquidity from the banking system.
"People were expecting some increase in the repo and reverse report rate. That has not happened and it has come as a positive surprise for the market," said Arun Kejriwal, strategist at research firm Kris.
Software services shares climbed after the government extended a tax holiday scheme by a year.
Infosys Technologies, the second-largest software services exporter, rose 5.2 per cent to Rs1,750.75.
The main BSE 30-share index ended up 2.13 per cent, or 362.50 points, at 17,378.46, its highest close since February 29, with 26 of its components rising.
In the broader market, 1,583 gainers were ahead of 1,125 losers on volume of 379 million shares.
The benchmark, which is down 14.3 per cent in 2008, had slipped into negative territory ahead of the monetary policy that was released at noon.
The central bank said it was raising the proportion of deposits that banks must set aside by 25 basis points to 8.25 per cent with effect from May 24 to control inflation-stoking cash in the banking system. It kept all other rates unchanged.
Kejriwal said the central bank's economic growth forecast of eight per cent to 8.5 per cent for Asia's third-largest economy in the fiscal year that began this month was also positive for the stock market.
Eyes on Fed
The market trend in the near term will be influenced by the US Federal Reserve's decision on Wednesday, when the US central bank may cut interest rates by 25 basis points, said Neeraj Dewan, director at Quantum Securities in New Delhi.
Reliance Industries, India's top listed firm, surged 2.4 per cent to Rs2,653 on short covering by institutional investors, traders said.
The tax holiday for Indian outsourcers based in technology parks was extended to March 2010 from March 2009. This would help top companies whose tax rates would have otherwise risen to 18-22 per cent from about 12-15 per cent, analysts said.
Top exporter Tata Consultancy Services gained 3.2 per cent to Rs910.80, third-ranked Wipro rose 4.7 per cent to Rs479.20, and No 4 exporter Satyam Computer Services soared 8.2 per cent to Rs479.35.
The sector index ended up 5.2 per cent.
The 50-share NSE index rose 2.08 per cent to 5,195.50.
Pakistan
Karachi index falls
Pakistan's benchmark Karachi Stock Exchange 100 Index fell 161.92 points, or 1.1 per cent, to 15,317.30 at the 2.15pm local-time close.
Oil & Gas Development Co., the No 1 explorer, dropped Rs2.30, or 1.7 per cent, to Rs136.20. National Bank of Pakistan, the biggest lender by assets, declined Rs3.10, or 1.3 per cent, to 229.90.
MCB Bank, the largest by market value, slid Rs8.92, or 2.1 per cent, to Rs412.
- Bloomberg
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