Sensex rises to 1-week high; Maruti slumps
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The BSE Sensex rose on Thursday to its highest close in a week as Reliance Industries gained a day before its quarterly earnings, while Infosys rallied after healthy U.S. earnings improved confidence in global IT spending.
Power equipment makers such as Bharat Heavy Electrical also rallied on hopes the government would impose import duties, while hopes for policy reforms boosted sectors expected to benefit such as airlines.
However, Maruti Suzuki slumped, posting its biggest daily percentage fall in two years, after halting production at its Manesar factory because of violent clashes between workers and managers.
The outlook for Indian markets still hinge on any potential reforms after the presidential elections taking place on Thursday. Caution also prevails after the weather office said rains so far in the monsoon season are 22 per cent below average, raising worries about rural consumption.
"I think the market was led by a short-covering rally in anticipation of the presidential elections, as nothing has changed fundamentally," said Deven Choksey, managing director at K R Choksey Securities.
"The market is going to be cautious post elections. If the government takes any actions on parliamentary reforms such as allowing FDI in insurance and retail sectors, and lowering subsidies for fertilizers and fuels, the markets would react positively," Choksey added.
The 30-share BSE Sensex rose 0.55 per cent to 17,278.85 points, posting a second consecutive daily gain that allowed it to post its highest close since July 11.
The 50-share Nifty rose 0.51 per cent to end at 5,242.70 points.
Reliance Industries rose 1.7 per cent ahead of its April-June quarter earnings on Friday, and helped after Nomura upgraded the stock to 'outperform', citing valuations and benefits from a weak currency.
Shares in Infosys rose 3 per cent, benefitting from a global risk rally after healthy profits from U.S. companies such as Intel and Honeywell reduced some of the recent concerns about the world's largest economy.
Infosys shares are still down 9.1 per cent since sharply cutting their guidance for the fiscal year a week ago.
Shares in Bharat Heavy Electricals gained 2.5 per cent and Larsen & Toubro rose 0.4 per cent on media reports the Indian government cabinet will meet on Thursday to discuss import duties in power equipments.
Shares in Steel Authority of India's rose 0.2 per cent as the government was also expected to discuss a potential stake sale, though analysts warned India was unlikely to do so unless share prices recovered further.
Potential policy reforms were also a factor on Thursday, as state assemblies and parliament were widely expected to elect former finance minister Pranab Mukherjee to the ceremonial post of president. Results are due on Sunday.
Investors believe the polls open a much-hyped political window billed as the best chance for the government to launch a wave of reforms and reverse an economic slowdown.
Kingfisher Airlines surged 9.6 per cent, on hopes the government would open the sector to foreign investment.
However, supermarket operators fell on profit-booking after recent rallies. Pantaloon Retail fell 0.8 per cent, after already surging 45 per cent this year as of Wednesday's close on hopes the government would also allow foreign investment in multi-brand retail.
Maruti Suzuki shares slumped 8.9 per cent, posting its biggest daily percentage fall since July 26, 2010, when the company had spooked investors with a surprise rise in royalty payments to its parent that had forced analysts to slash growth estimates.
Police were searching on Thursday for 3,000 people they want to detain after one person was killed and scores injured in a riot at Maruti Suzuki's factory in Manesar.
Copyright @Thomson Reuters 2012