Saturday, February 02, 2008

India's Sensex Gains After Four-Day Drop; Reliance, ICICI Lead

By Shailendra Bhatnagar

Feb. 1 (Bloomberg) -- India's Sensitive Index rose, paced by Reliance Industries Ltd. and ICICI Bank Ltd., after investors judged the recent four-day decline as excessive.

``It is an attractive market after the fall in January and most companies have delivered on results, there have been no negative surprises,'' said R. Balakrishnan, executive director at Mumbai-based Centrum Broking Ltd. ``The refunds from initial public offers should see retail and institutional money coming back into the market.''

The Bombay Stock Exchange's Sensitive Index, or Sensex, gained 584.71, or 3.3 percent, to 18,233.42, after earlier dropping as much as 0.6 percent. The gauge of 30 companies had fallen 3.9 percent in the past four trading days. It slipped 13 percent in January, its worst start, mainly on net sales by overseas investors. The S&P CNX Nifty advanced 179.80, or 3.5 percent, to 5,317.25.

Overseas investors sold a net $3.4 billion of Indian shares in January, the most since at least 1997, according to data compiled by Bloomberg. The flight was mainly on concern a recession in the U.S. will slow growth in India and Asia.

Reliance Industries Ltd., the nation's most valuable company, gained 62.15 rupees, or 2.5 percent, to 2,541.65. ICICI Bank Ltd., India's most valuable bank, rose 52.1 rupees, or 4.6 percent, to 1,197.75 and Infosys Technologies Ltd., the nation's second-largest exporter of software services, gained 87.20 rupees, or 5.8 percent, to 1,591.10.

Rate Differential

``This is a seriously under-bought state,'' said Sushil Kedia, head of institutional equities at K&A Securities Ltd. ``Also, the increasing difference in interest rates between the U.S. and India will either cause a wall of cash to rush in or rates to drop in India.''

The U.S. Federal Reserve last month cut interest rates twice in two weeks to bolster confidence in the financial markets and shore up sliding U.S. equities. In contrast, the Reserve Bank of India left key interest rates unchanged near six-year highs to give itself time to assess the effect of slowing global growth on Asia's third-largest economy.

Jet Airways (India) Ltd. rose 40.85 rupees, or 5.4 percent, to 796.1 after state-run refiners cut jet fuel prices for the second month in a row, reducing rates in February as much as 1.7 percent. The price in Mumbai, home to the nation's busiest airport, fell 811.8 rupees ($20.62) a kiloliter to 46,233.4 rupees a kiloliter, Kali Krishna, a spokesman for Indian Oil Corp., said in New Delhi. That equals $4.44 a gallon.

Future Growth

Future Capital Holdings Ltd. rose 143.2 rupees, or 19 percent, to 908.2, after rising as much as 44 percent in its trading debut on the Bombay Stock Exchange. The Mumbai-based company raised 4.9 billion rupees selling 6.42 million shares at 765 rupees apiece.

Kishore Biyani, chief executive officer of the Future Group, plans to use the funds to expand businesses, including asset management, retail financial services and research. The company will use the retail network of parent Pantaloon Retail India Ltd. to add to its Future Money outlets, which provide financial services, including loans.

Indian Oil, the nation's largest refiner, rose 11.75 rupees, or 2.5 percent, to 492.3. Oil & Natural Gas Corp., India's top explorer, rose 56.1 rupees, or 5.7 percent, to 1,044.50 rupees.

The government this week decided to allow foreign companies planning ventures with state-run oil companies to own a stake of as much as 49 percent compared with the current 26 percent limit.

Housing Development Finance Corp., partly owned by Citigroup Inc., rose 154.8 rupees, or 5.4 percent, to 2,998.3 after the mortgage lender announced a reduction in interest rates this month, the first such move in almost five years.

To contact the reporters on this story: Shailendra Bhatnagar in New Delhi at Sbhatnagar3@bloomberg.net .

Source : bloomberg.com

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