Indian shares rose to their highest close in six weeks on Thursday, on rising foreign portfolio inflows as global risk-taking improves on moves by the International Monetary Fund to help countries deal with the euro zone debt crisis.
HDFC Bank climbed one per cent after the lender reported a higher-than-expected 31.2 per cent rise in quarterly profit as a drop in loan-loss provisions and higher fee income made up for weak loan demand. Bigger rival ICICI Bank, which releases its financial result on January 31, rose 3.6 per cent, leading the gains in the main index.
The 30-share Bombay Stock Exchange index closed up 1.17 per cent at 16,643.74, its highest close since December 7. Twenty-three of its components gained. “The confidence is back,” said K K Mital, head of portfolio management services at Globe Capital, with foreign funds returning to the market.
Foreign institutional investors moved more than $1 billion into Indian shares since the new year began, helping the benchmark index gain 7.7 per cent since the end of December. In 2011, the index fell nearly a quarter as foreign funds pulled out more than $500 million, after a series of rate increases by the central bank to fight inflation hurt growth.
Headline inflation slowed in December to a two-year low as food price pressure fell sharply. The food price index in the year to January 7 fell 0.42 per cent, data on Thursday showed. Foreign funds also bought about $3 billion of local debt this month, data from the market regulator showed. Investors turned sharply bullish on most emerging Asian currencies in the last two weeks, especially the Indian rupee and the Indonesian rupiah.
The Reserve Bank of India (RBI) will not cut interest rates at its review next Tuesday, but nearly unanimously expected the central bank to do so by the end of June. Gajendra Nagpal, chief executive at Unicon Financial Intermediaries, said the RBI could give a signal about the outlook for rates and set the direction for the market. Engineering conglomerate Larsen & Toubro firmed up 2.95 per cent, while energy major Reliance Industries ended up 0.8 per cent.
Bharti Airtel, the country’s top mobile phone carrier, bucked the trend and fell 1.4 per cent after a Rs 10.67 billion ($210 million) tax demand by the government. The company, which operates telecoms services in 19 countries across Asia and Africa, said it would challenge in court the tax demand over payments to international telecoms operators. DLF closed up 4.4 per cent after the Economic Times reported the company is in talks to sell Rs 18 billion ($357 million) worth of non-core assets in the fiscal year that begins in April.
The 50-share National Stock Exchange index was up 1.26 per cent at 5,018.40. In the broader market, 994 gainers were ahead of 461 losers on relatively heavy volume of 724.6 million shares. World stocks rose to their highest in over two months on Thursday as risk appetite improved on hopes Greece will reach an agreement with its creditors and the International Monetary Fund will boost resources to tackle the euro zone debt crisis.
