MUMBAI, Sept 17 (Reuters) - India's main BSE index rose for
a ninth consecutive session to its highest close since July
2011, as retailers such as Pantaloon and airlines such as
SpiceJet surged after the government opened up the sectors to
foreign direct investment.
Lenders such as ICICI Bank also rallied after the
Reserve Bank of India cut the cash reserve ratio, or the amount
of deposits the sector must keep with the central bank.
Although the RBI also disappointed some investors by keeping
its main lending rate on hold, Indian shares held onto a big
chunk of its earlier gains as the government's recent slew of
measures signalled a strong willingness to act despite strong
opposition from coalition allies.
Cyclical stocks extended recent gains, as these sectors are
also expected to benefit as the Federal Reserve's new asset
purchase programme unleashes additional liquidity, while
previously favoured defensive stocks such as ITC
Still, analysts warned shares were susceptible to
profit-taking in the short run, although they expected gains to
continue over the medium-term.
"It has been a one way movement on Nifty but now it's time
for some consolidation to kick in as most of the important
events are behind us," said Sonam Udasi, head of research at
India's benchmark BSE index rose 0.42 percent, or
78 points, to 18,542.31 points, its highest close since July 25,
The 50-share NSE index rose 0.58 percent, or 32.4
points, to 5,610 points.
The recent measures from the government have led a slew of
foreign banks to upgrade their targets for the BSE index, or
Deutsche Bank raised its December 2012 target for the BSE
index to 20,000 while Citigroup raised its BSE target
to 19,900 for June 2013 .
Morgan Stanley predicted the BSE would hit a record high
next year, setting a new target for the index at 23,069 points
by end-December 2013, which would smash the previous record high
of 21,206.77 points hit in January 2008.
RETAILERS, AIRLINES SURGE
Indian retailers surged after the government will allow
foreign supermarkets to buy up to 51 percent in a local partner.
Pantaloon Retail, partly-owned by India's biggest
retailer Future Group, surged 18.9 percent, after already
gaining 7.1 percent on Friday when investors had speculated
government action was forthcoming.
Property developer DLF rose 6.9 percent, while mall
operator Phoenix Mills gained 9.6 percent on hopes the
government retail action might lead to increased demand for
Airlines surged after the government allowed foreign
carriers to invest up to 49 percent in domestic companies.
SpiceJet rose 11.9 percent after already gaining
17.3 percent in the previous four sessions. Kingfisher Airlines
surged 19.9 percent after gaining 17.3 percent in the
prior three sessions.
Cable service provider Dish TV rose 2.6 percent
after the government said it would raise FDI limits to 74
percent from the previous 49 percent.
Key stakeholders in power exchanges rose after India allowed
up to 49 percent foreign investment into the sector. PTC India
Financial Services, the promoter of Indian Energy
Exchange, rose 6.2 percent.
ICICI Bank rose 5.2 percent, while State Bank of
India rose 5.5 percent, as the RBI's cut in the cash
reserve ratio is expected to have a more direct impact on
liquidity and profitability in the banking system than a rate
Blue chips also extended gains, especially those seen as
more cyclical or high-beta.
Reliance Industries rose 3.8 percent after gaining
5.3 percent on Friday, while Larsen & Toubro rose 4.4
percent after gaining 5.1 percent on Friday.
However, defensives were routed after being among the top
performers this year given expectations they may not benefit in
a post-QE3 environment.
Shares in cigarette maker ITC fell 5.5 percent
after surging through most of the year, having hit a record high
at 273.5 rupees on Aug. 30.
Software services exporters dropped after the rupee
rose to four-month highs, raising worries about the impact on
Tata Consultancy Services fell 5 percent after
hitting a record high of 1,439.80 rupees on Friday.
For additional stocks on the move double click
FACTORS TO WATCH
* Dollar pinned near 7-month low as Fed easing weighs
* Oil steady over $116 as QE balances growth worries
* Fed euphoria prompts risk rally
* Foreign institutional investor flows
* For closing rates of Indian ADRs
ASIA-PACIFIC STOCK MARKETS:
Pan-Asia........ Japan....... S.Korea...
S.E. Asia....... Hong Kong... Taiwan....
Australia/NZ.... India....... China.....
Wall Street .... Gold ....... Currency..
Eurostocks..... Oil ........ JP bonds...
ADR Report ..... LME metals. US bonds..
Stocks News US.. Stocks News Europe
DIARIES & DATA:
Indian Data Watch Asia earnings diary
U.S. earnings diary European diary
Indian diary Wall Street Week Ahead
Eurostocks Week Ahead
For top Asian company news, double click on:
U.S. company news European company news
Forex news Global Economy news
Technology news Telecoms news
Media news Banking news
Politics/General Asia Macro data
(Editing by Rafael Nam)