Indian shares are seen rising for the third straight week as traders buy metal, automobile and cement stocks, betting on strong quarterly earnings in one of the world's fastest growing economies, brokers said.
Traders are optimistic companies will report robust profits and upbeat forecasts when they start rolling out quarterly results this week, buoyed by scorching growth in the farm-dependent economy.
"Earnings growth for economy-related stocks should be good due to spectacular GDP growth," said B.P. Singh, head of equities at Deutsche Asset Management (India) Pvt Ltd.
The 30-issue Bombay share index rallied about five percent last week after government data showed Asia's third-biggest economy grew by 10.4 percent in the third fiscal quarter ended December 31.
The index ended at 5,788.08 on Friday, but is still down 7.4 percent from a historic high struck in early January.
India's gross domestic product (GDP) is forecast to have grown more than eight percent in the year ended March 31.
"The blazing growth has brought focus back to earnings. We could see the index rallying past the 6,000 level before the elections," said Bharat Shah, a director with Vikram Kenia Securities.
Chartists said the index faced resistance at 5,860 points.
Elections in the world's biggest democracy will be held in four phases, starting on April 20. Some traders said the next big rally would only come after the new government takes charge in mid-May.
Traders expect steel, cement and oil stocks to spearhead an earnings-inspired rally in the near term.
The top two steel makers - industry leader state-run Steel Authority of India Ltd and the No 2 Tata Iron and Steel Co, reported record output for the year ended March.
Automobile makers have also been on a roll. The biggest car maker, Maruti Udyog Ltd, and the largest motorcycle maker, Hero Honda Motors Ltd, have shown strong volume growth, buoyed by soft interest rates and strong demand.
Overseas funds have pumped $3.16 billion into Indian shares in the first three months of 2004, lured by strong economic growth. They added a record $6.7 billion worth of local shares to their portfolios last year, powering a 73 percent rise in the Bombay index.
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