India's key share index rose in relief on Monday, with investor sentiment buoyed by a return to the roads of about 3 million trucks countrywide after the truckers' unions called off their week-old strike at the weekend.
But federal bonds slid after the central bank told investors to factor in a neutral outlook for interest rates and warned of global factors exerting upward pressure on local rates. Month-end dollar demand from importers pushed the rupee lower.
The 30-share Mumbai Stock Exchange index rose 1.36 percent to 5,186.45 points, adding to last week's 1 percent gain.
"There were no major triggers, but sentiment was greatly improved after the truckers' strike ended," said Bharat Shah, a director of Vikram Kenia Securities.
The truckers had abandoned their routes to press the federal government to scrap a proposed tax, and the strike sparked fears of lower output and higher prices that could stoke inflation, which is already hovering just below 8 percent.
Traders said expectations of good monthly sales numbers from cement and automobile makers - which were among some of the companies badly hit by the strike - had also spurred buying.
"Volumes have improved marginally because of some fund buying, and we should see more activity as the auto and cement numbers come in, and if oil prices stay steady."
Maruti Udyog Ltd, the biggest car maker, gained 5.7 percent and Tata Motors Ltd, the biggest bus and truck maker, rose 3.1 percent. Auto makers are expected to report their sales data later this week.
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