Nifty hits record high above 8,600; state-run lenders gain

By Indulal PM

MUMBAI (Reuters) - The BSE Sensex and Nifty shares hit a record high on Friday, rising for the third straight session, led by gains in lenders such as State Bank of India after the government said it would cut its stake in state-run banks.

The government plans to raise about 891.2 billion rupees ($14.4 billion) by reducing its stakes in state-run banks to 52 percent, the junior finance minister said on Friday, sending shares of state-run lenders higher.

Overall sentiment was bullish ahead of the economic growth data later in the day and the central bank's policy review due on Dec. 2.

 

Overseas investors bought Indian shares worth $424.21 million in the last five straight sessions, putting their total investment so far this year at $15.81 billion.

"Sentiments were buoyed by OPEC's decision to sustain their production levels and the subsequent sharp fall in crude prices. The risk appetite came back and markets are hoping for a rate cut in the RBI policy meeting next week," said Dipen Shah, head of private client group research at Kotak Securities.

"Going ahead, apart from the RBI meeting, fiscal reforms from the government will be needed for the markets to move higher on a sustainable basis," he added.

The BSE Sensex closed 0.9 percent higher at 28,693.99 points. Earlier in the day, it was up as much as 1.35 percent to a record high of 28,822.37, surpassing the previous high of 28,541.96 posted on Nov. 24.

The index gained 1.3 percent in the week, and 2.97 percent in the month.

The broader Nifty closed 1.11 percent higher at 8,588.25 points, after hitting a record high of 8,617 points earlier in the day. The index gained 1.3 percent in the week and 3.2 percent in November.

State-run banks led the gains with the Bank Nifty closing up 2.7 percent and the index for state-run banks up 5.7 percent after the government's plans to sell stake in state-run lenders.

State Bank of India closed 5.1 percent higher, at its highest level since November 2010. Bank of Baroda closed up 7.1 percent and Punjab National Bank gained 7.4 percent.

Interest rate-sensitives such as auto companies also gained ahead of the RBI policy. Mahindra and Mahindra closed 2.4 percent higher while Tata Motors ended up 2.6 percent.

State-run oil marketing companies and airline stocks rallied after international crude prices hit a multi-year low. Indian Oil Corp ended up 4.6 percent while Hindustan Petroleum Corp Ltd gained 8.95 percent.

Among airline stocks, Jet Airways surged 20 percent while SpiceJet ended 18.4 percent higher.

Shares in Just Dial Ltd gained 2.2 percent after the Reserve Bank of India allowed foreign institutional investors to buy up to 75 percent in the company.

Among the losers, Hindustan Unilever ended 0.5 percent lower on profit-taking. The stock had gained 2.6 percent in the previous session.

(Editing by Sunil Nair)