Sensex gains for second week ahead of poll results

By Abhishek Vishnoi

MUMBAI (Reuters) - BSE Sensex rose on Friday to their highest close in more than a month, extending gains for a second consecutive session on hopes that state elections results on Sunday will show strong support for the main opposition party ahead of general elections next year.

The main opposition Bharatiya Janata Party is perceived by many investors as being more business-friendly, and investors say a good showing in state elections held since last month could spark further gains in indexes that are already near record highs.

Continued foreign investor buying has also supported shares. Overseas investors were buyers of 11.51 billion rupees worth of shares on Thursday, taking total inflows for the year to over 1 trillion rupees, regulatory and exchange data show.

 

The uncertainty about when the U.S. Federal Reserve would begin to halt the flow of easy money has dominated trading worldwide for months and the main U.S. jobs indicator -- the non-farm payrolls data, due at 1330 GMT -- may yet tip the balance again.

The median forecast is for an increase of 180,000 in U.S. payrolls with the jobless rate steady at 7.2 percent.

"We believe that while our markets will get impacted if the Fed tapers, but they will not be in a mood to even consider the news unless it gets the actual assembly (election) results out of the way," said Jyotheesh Kumar, executive vice-president of HDFC Securities.

The benchmark Sensex rose 0.18 percent, or 38.72 points, to end at 20,996.53, its highest close since November 1. This also marked its second consecutive weekly gain.

The index is not far from a record high of 21,321.53 hit on November 3.

The broader Nifty rose 0.3 percent, or 18.80 points, to end at 6,259.90, also gaining 1.4 percent for the week, not far from a record 6,357.10 hit on January 8, 2010.

The share rally is, however, masking an underlying weakness. The market has been lifted by just a handful of stocks of exporters reaping the benefits of a slump in the rupee.

Blue chips rose again on Friday. Axis Bank Ltd rose 3.1 percent, while ICICI Bank Ltd ended 0.7 percent higher

Shares of two-wheeler companies gained on optimism about their earnings outlook. Hero MotoCorp Ltd rose 2.2 percent, Bajaj Auto Ltd gained 0.5 percent, while Eicher Motors Ltd rose 1.5 percent.

Power Grid Corp of India Ltd shares rose 2.8 percent after stronger-than-expected demand for its $1.1 billion share sale.

Sugar companies surged after farm minister Sharad Pawar said India was looking at providing incentives for production of raw sugar and also at doubling the mandatory blending of ethanol in gasoline to 10 percent.

Balrampur Chini Mills Ltd gained 2.6 percent, Bajaj Hindusthan Ltd surged 5.8 percent, while Shree Renuka Sugars Ltd ended 5 percent higher.

Among stocks that fell, Jubilant Life Sciences Ltd shares fell 7.5 percent adding to Thursday's 10 percent fall after the company said it had received a warning from the U.S. Food and Drug Administration over manufacturing practices at one of its U.S. facilities.

(Editing by Prateek Chatterjee)