Indian shares extended recent gains on Thursday after the rupee breached the 55 mark to hit a two-week high against the dollar reflecting a return of appetite for risk.
Besides positive global cues, talks of the government giving a big push to infrastructure development also bolstered sentiment. Benchmark indexes Sensex and the Nifty ended a tad lower from the day's highs, weighed down by reports of the Union Cabinet deferring a decision on the Pension Bill due to lack of consensus, especially amid opposition by key UPA constituent Trinamool Congress.
Extending its rally for the fourth consecutive session, the benchmark BSE Sensex ended the day up 195 points or 1.18 percent to 16,649, with 25 of its components advancing. TCS and Wipro shed 1-2 percent, weighed down by the rupee's strength recently, state-run oil firm Gail India lost a percent, aluminum maker Hindalco slid 0.6 percent and drugmaker Cipla eased 0.1 percent.
The broader Nifty index rose by 53 points or 1.05 percent to 5,050, while the BSE mid-cap and small-cap indexes underperformed, rising just about half a percent each.
Buying was visible across the board, although gainers were led by rate-sensitive realty, banking and auto stocks on hopes of the Reserve Bank of India easing its policy further at the upcoming monetary policy meeting on June 18.
SBI edged up 0.4 percent as the state-run lender cut retail deposit rates, saying it is reasonably comfortable on the liquidity front. Private sector rival ICICI Bank climbed 2.8 percent, HDFC Bank rallied 3.5 percent, Axis Bank advanced 3.7 percent and mortgage lender HDFC rose 0.9 percent.
In the realty sector, Unitech, Sobha Developers, DB Realty, DLF and HDIL rose 1-3 percent. Automakers Tata Motors, Mahindra & Mahindra and Maruti Suzuki climbed 1-3 percent on speculation that the government may not hike the excise duty on diesel cars given the recent sell-off in crude futures on global growth worries.
Infrastructure, capital goods and power stocks rallied for a second day after Prime Minister Manmohan Singh vowed to push ahead with major transport and power projects in the current fiscal year. GMR Infra added a percent, BHEL rose 1.2 percent and NTPC gained 1.8 percent.
Shares of engineering & construction giant Larsen & Toubro ended 0.8 percent higher. The company said its construction arm has won orders worth Rs 2,410 crore across various businesses during the first quarter of 2012-13.
Reliance Industries rose 0.9 percent as the energy giant unveiled plans to invest Rs. 1,00000 crore across energy, retail and telecom businesses to double its operating profit in the next 4-5 years. Suzlon Energy rallied 3.1 percent after it agreed to invest Rs 15000 crore for setting up a 2500-MW wind farm in Karnataka.
Mangalore Refinery and Petrochemicals advanced 2.1 percent after the Karnataka government sanctioned a special incentive package for the company's phase-III expansion and upgradation projects. IVRCL soared 5.5 percent on the buzz of a favorable court decision on its merger with IVRCL Assets & Holdings.
West Coast Paper Mills rose 2.7 percent on reports that it has put its newsprint arm on the block. NIIT Technologies fell 2.4 percent following an announcement that it has appointed Patrick Grubbs as its senior vice president of travel, transport & logistics vertical.
Elsewhere, other Asian markets extended gains for a third consecutive session on Thursday, boosted by hopes of fresh stimulus measures from the U.S. and European policymakers even as the European Central Bank resisted calls for a rate cut.
ECB President Mario Draghi kept interest rates unchanged yesterday, but stressed that the central bank stands ready to fix any "increased downside risks" to growth. Draghi also downplayed concerns over growth, saying he expects the economy recover gradually later this year.
Hopes of strong action by Fed Chairman Ben Bernanke were lifted by comments from Atlanta Federal Reserve President Dennis Lockhart yesterday, who emphasized on extending Operation Twist, a program which is set to expire at the end of this month. Bernanke's testimony before the joint economic committee later in the day may provide some clues to whether the Federal Reserve is mulling over a third round of bond buying.
European stocks were modestly higher amid some volatility after debt auctions by Spain and France passed off without much hiccups. Spain raised 2.07 billion euros from its debt auction, exceeding the 2 billion euros maximum target, but borrowing costs increased notably.
For comments and feedback: editorial@rttnews.com