India's key stock index rose to a two-week closing high on Friday as investors cheered the huge response to the nation's record share issue, which was oversubscribed within minutes of the offer opening.
The government is selling a 10 percent stake in energy firm Oil and Natural Gas Corp, India's most valuable company, at 680 to 750 rupees a share. It is selling nearly 143 million shares for more than $2 billion, and overseas demand was strong on the first day.
The 30-issue Mumbai share index closed up 1.11 percent at 5,880.35 points, its highest close since February 18, rising 3.8 percent on the week.
"The uncertainty due to the overhang of the ONGC issue is out of the way and that is a positive for the market," said Shankar Char, senior manager institutional sales at Cholamandalam Securities.
He said the index has closed above a crucial resistance level of 5,870 points, pointing to a mildly bullish outlook. Leading Friday's rise was ONGC, whose shares jumped 5.6 percent to 802.25 rupees on news the issue was subscribed 2.2 times. The response sparked a rally in other state-run companies.
GAIL Ltd, whose public offer closed on Friday, rose 3.3 percent to 214.70 rupees and Dredging Corporation of India, whose issue was subscribed about 18 times, jumped 20 percent to 588.70 rupees.
Traders also picked up steel and cement stocks on hopes that higher demand for goods and services in an economy expected to grow at more than eight percent in the year to March 2004 will boost their earnings.
Tata Iron and Steel Co, the nation's No 2 steel maker, gained 3.2 percent to 442.60 rupees and Associated Cement Companies Ltd, the biggest cement maker, rallied 3.3 percent to 273.05 rupees.
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