Indian Shares Rally On Rating Action, Reform Hopes - InvestingChannel

Indian Shares Rally On Rating Action, Reform Hopes

Indian shares rallied on Tuesday amid all-round buying after global credit ratings agency Moody’s maintained India’s rating outlook at stable, citing strong GDP growth rate as well as savings and investment rates that exceed emerging market averages. The stable outlook on India’s rating is based on the expectation that the economy’s structural strengths will ultimately lift the GDP growth rate from around 5.4 percent in FY 2013 to 6 percent or higher in FY 2014.

Meanwhile, after chaos in Parliament for the fourth consecutive session, the government indicated that it was not averse to debate the issue of FDI in multi-brand retail under any rule. ”We are not concerned about a vote. I will apprise Lok Sabha, let the Speaker decide,” Parliamentary Affairs Minister Kamal Nath said. The new-found confidence and media reports that the DMK will back the government on FDI in retail lifted expectations that the government will carry through its difficult reforms announced in mid-September. Investors were awaiting a media briefing by Finance Minister P Chidambaram after the close of trading.

Global cues also helped support sentiment to some extent after Euro zone officials and the International Monetary Fund agreed to provide more funding for debt-stricken Greece. The complex deal reached late Monday will enable Athens to receive 34.4 billion ($40.8 billion) immediately and three additional payments in early 2013.

To reduce the Greek debt, Eurozone finance ministers also agreed to reduce interest rates on Greece’s bailout loans, suspended interest payments for a decade and allowed Greece to buy back its own bonds from private investors. Greece has pledged to cut its debt to GDP ratio to 124 per cent by 2020, with the assumption that it can grow by almost 50 per cent.

The benchmark BSE Sensex ended the session up 305 points or 1.65 percent to end near the day’s high at 18,842, with 28 of its components advancing. NTPC fell 0.4 percent after the government initiated the process of divesting a 9.5 percent stake in the state-run power producer. ONGC slipped marginally after its overseas arm ONGC Videsh agreed to buy U.S. energy major ConocoPhillips’ 8.4 percent stake in the Kashagan oilfield in Kazakhstan’s Caspian Sea area for about $5 billion.

The broader Nifty index climbed 92 points or 1.62 percent to 5,727, while the BSE mid-cap and small-cap indexes rose 1.2 percent and 0.9 percent, respectively.

Among the prominent gainers in the Nifty pack, Jindal Steel, Ambuja Cement, ITC, SesaGoa, HDFC Bank, HDFC, Reliance Infrastructure, BPCL, JP Associates and Bharti Airtel soared 2-5 percent. Telecom major Bharti Airtel jumped 4.75 percent after the Communications Commission of Kenya cut the rate mobile operators charge each other for interconnecting customers by 35 percent.

Bank shares led the gainers on short covering ahead of the expiry of near-month derivative contracts on Thursday. SBI, Kotak Mahindra Bank, ICICI Bank, PNB, Axis, HDFC Bank, Yes Bank and Union Bank of India rose 1-4 percent.

Reliance Power rallied 3.2 percent on reports that it is reviving Krishnapatnam Project. Suzlon Energy soared almost 10 percent on news of corporate debt restructuring. IndusInd Bank added 2.2 percent on fund raising reports.

SKS Microfinance hit the 5 percent upper circuit limit after Finance Minister P Chidambaram said the proposed Bill on micro-finance institutions, currently being scrutinized by a Parliamentary Standing Committee, will provide adequate legislative framework for development and regulation of the sector.

Cinemax India shares gained 1.6 percent after the PVR management said it is engaged in talks with promoters of Cinemax to buy their shares. IOC rose 1.2 percent after the state-owned oil retailer unveiled plans to build a new 15 million ton refinery in Gujarat.

On the global front, other Asian markets ended on a mixed note as weakness in Chinese shares and worries over the looming U.S. fiscal cliff tempered the optimism over Greek aid deal. China’s Shanghai Composite index fell 1.3 percent to end below the psychologically important 2,000 level for the first time in nearly four years on concerns that slowing bank lending could curb economic growth. European stocks were higher in early trading on the back of last night’s Greek aid deal.

by RTT Staff Writer

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