Indian shares rallied for a second straight day on reform hopes after finance minister P Chidambaram unveiled a roadmap to revive economic growth. In his first formal interaction with reporters after returning to the finance ministry, he promised fine-tuning of policies and corrective measures on proposals such as the general anti-avoidance rules and retrospective amendments, helping boost investor sentiment.
The rupee traded higher following global trends and cues from Asia and Europe remained supportive, leading to further improvement in risk appetite. With Chidambaram announcing plans to reduce the fiscal deficit and address tax concerns of overseas investors, investors shrugged off a downgrade of India's 2012-13 GDP forecast by CRISIL.
The benchmark 30-share Sensex rose to a four-month high before paring gains to end up 189 points or 1.08 percent at 17,602, with 26 of its components advancing. Market heavyweight Reliance Industries edged down 0.2 percent on profit taking following the previous session's rally, while Sun Pharma, Bharti Airtel and Hero MotoCorp fell between 0.3 percent and 1.4 percent.
The broader Nifty index rose by 54 points or 1.03 percent to 5,337, while the BSE mid-cap and small-cap indexes ended up about 0.4 percent each.
Banks rose after the finance minister promised to announce measures to attract investments in mutual funds, insurance policies and other well-designed instruments. ICICI Bank and SBI rose about 2 percent each.
Automakers rallied after Chidambaram vowed to take measures to bring down interest rates, spur investment and ease the burden on consumers. Maruti Suzuki, Bajaj Auto and Tata Motors climbed 1-4 percent.
Realtor DLF gained 3 percent despite reporting an 18 percent drop in first-quarter consolidated net profit. Wipro, HCL Technologies, Infosys and TCS rose 1-3 percent after Cognizant Technology Solutions Corp lifted its full-year profit forecast.
IDBI Bank rose 0.8 percent after launching an online portal - IDBI Samriddhi -that facilitates investments in government securities.
Unitech rose 0.7 percent after the Delhi High Court allowed its group firm Uninor to receive the expressions of interest from bidders interested in buying its assets till August 8. Seamac climbed 7 percent and Engineers India rose 2.3 percent on winning new orders.
Standard Chartered Plc's Indian depositary receipts plunged 20 percent to hit the lower circuit limit after New York's state regulator threatened to strip the lender of its state banking license, saying the British lender hid $250 billion in transactions tied to Iran.
Essar Shipping slumped 7 percent on profit taking after rallying 20 percent the day before. Bharat Earth Movers fell 2.2 percent on dismal Q1 earnings. Sugar producer Balrampur Chini fell 1.4 percent on disappointing earnings results.
Elsewhere, other Asian markets ended mostly higher, as falling Spanish and Italian bond yields and continued hopes that Europe would take further action to help troubled euro-zone members kept investor mood upbeat. Expectations that the ECB may take action to ease the continent's crisis increased after German Chancellor Angela Merkel supported the European Central Bank's bond-buying plan.
European stocks were trading on a lackluster note after data showed German factory orders fell a seasonally-adjusted 1.7 percent in June, twice as much as economists forecast.
by RTT Staff Writer
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