BSE Sensex surges on Bernanke's comments

By Abhishek Vishnoi

MUMBAI (Reuters) - Indian shares rose more than 2 percent to their highest levels since early June as blue chips such as ITC staged a broad recovery from recent falls on hopes that U.S. monetary stimulus would not end as early as feared.

Federal Reserve Chairman Ben Bernanke said on Wednesday the U.S. central bank would continue to pursue an accommodative monetary policy as inflation remained low and the unemployment rate might be understating the weakness of the labour market.

That helped ease concerns about foreign selling that have hit Indian markets. Overseas investors have sold a net 100.8 billion rupees of shares since the start of June.

 

Still, some caution also prevailed ahead of Infosys Ltd earnings due on Friday, which will kick off the blue chip reporting season, and data on industrial production and consumer prices also due on Friday.

Deven Choksey, managing director, K R Choksey Securities Ltd, said Bernanke's statement assured the market that he was in no hurry to scale back stimulus.

"Investors need to watch out for more measures on rupee depreciation for further direction," said Choksey.

The BSE Sensex gained 1.87 percent after earlier hitting its highest mark since June 4, while the Nifty rose 1.92 percent, after earlier marking its highest intraday level since June 7.

Both indexes were headed for their biggest daily percentage gains since June 28.

Blue chips led gains, with ITC Ltd up 1.9 percent and HDFC Bank Ltd up 3.2 percent.

Infosys gained 1.7 percent a day ahead of its April-June earnings.

Shares in Mangalore Chemicals & Fertilizers Ltd (MCF) surged 10 percent to a record high, hitting their maximum daily limit for a second consecutive session, on expectations the company is becoming a target for a takeover.

Shares in Apollo Tyres Ltd gained as much as 2.45 percent, hitting their highest intraday level since June 18, after Morgan Stanley Asia (Singapore) Pte on Wednesday bought a 0.5 percent stake in the company via a bulk deal, NSE data shows.

However among stocks that fell, State Trading Corp of India Ltd lost 3.8 percent after a government minister said the cabinet approved planned stake sale in the company.

(Editing by Anand Basu)