Sensex, Nifty scale new peaks as banks, infra stocks rally

By Tanvi Mehta

REUTERS - Indian shares rose to record highs on Wednesday as banks soared after the cabinet unveiled a $32.4 billion recapitalisation plan, while construction stocks rallied after the government approved an $82.2 billion investment plan.

State Bank of India was the top percentage gainer in the NSE Nifty, surging as much as 27 percent to its highest since January 2015, after the government said it would inject 2.11 trillion rupees ($32.40 billion) into the sector over the next two years.

Larsen & Toubro was the third-largest gainer in the index as it rose as much as 6.3 percent.

The government on Tuesday also approved plans to invest 6.92 trillion rupees ($106.27 billion) in five years to build roads that will connect all states from the western state of Rajasthan to the north-eastern states of Arunachal Pradesh right up to the Myanmar border.

 

Analysts said the actions could help improve an economy that has grown at its lowest in three years, and extend a record-setting rally in share markets this year.

"We see India continuing to set itself up well - through fairly aggressive reforms, corporate discipline, favourable macros, and now a stab at addressing a key cog in that wheel. We remain positive on markets, and maintain our 11,100 Nifty target," Edelweiss analysts wrote in a note.

The broader Nifty was up 0.92 percent as of 0832 GMT after earlier rising as much as 1.3 percent to a record high.

The BSE Sensex was 1.4 percent higher after earlier gaining as much as 1.6 percent.

Nifty PSU bank index jumped as much 28.6 percent in its biggest intraday percentage gain since Jan. 2011 , with Punjab National Bank shooting up as much as 40 percent to its highest since February 2015.

Besides L&T, shares of major road builders such as Ashoka Buildcon Ltd , Sadbhav Infrastructure Projects Ltd and J Kumar Infraprojects Ltd also gained.

Nearly 70 stocks hit their highest in 52 weeks on the NSE.

($1 = 65.1300 Indian rupees)

(Reporting by Tanvi Mehta in Bengaluru)