India's key share index rallied to a new closing high and the rupee rose to a two-week peak on Tuesday on a flow of foreign fund investments into an economy forecast to post sturdy growth. The 30-share Mumbai Stock Exchange index ended up 0.75 percent at 6,451.30 points, surpassing its previous record of 6,437.00 hit on Thursday. The index hit a new intra-day peak of 6,461.64 points.
"There seems to be a reluctance to sell at these levels, and even negatives are getting brushed aside," said Ambareesh Baliga, vice president of Karvy Stock Broking.
"There's enough liquidity coming in from foreign and domestic funds, and interest across sectors in large- and mid-caps."
Foreign funds have bought a record $8.7 billion of Indian assets so far this year, including shares worth $8.12 billion, helping boost the index 10.5 percent since January.
Cement and auto makers led the rally, along with private-sector banks and energy stocks.
Hero Honda Motors Ltd, the biggest motorcycle maker, rose 6.8 percent to 557.15 rupees on market talk it may set up an additional manufacturing facility and get tax benefits while Bajaj Auto Ltd, the No 2 motorcycle maker, closed 3.7 percent higher at 1,099.60 rupees.
Cement makers climbed on expectations of higher prices in an economy expected to grow by at least 6 percent this year.
Grasim Industries Ltd, the biggest producer by capacity, rose 1.1 percent to 1,310.45 rupees and Gujarat Ambuja Cement Ltd, the No 3 producer, rose 0.7 percent to 394.75 rupees.
Reliance Industries Ltd, the biggest petrochemicals maker and a major refiner, rose 1 percent to 485.50 rupees after it said on Monday its board would meet on December 27 to consider a share buyback.
Shares of Reliance group companies have been under pressure since a spat between the Ambani brothers, who run the group, became public around a month ago. Traders are now hoping that the feud will be settled soon.
The rupee ended at 43.8000/8200 per dollar, up 0.26 percent from Monday's close of 43.9200/9350, with sentiment on the local currency boosted by the dollar's overseas weakness and foreign fund inflows.
Federal bonds rose on hopes inflation might ease as crude oil prices dipped in global markets and after the central bank boosted money market liquidity through its daily repo.
The yield on the well traded 7.38 percent 2015 bond fell to 6.6744 percent 6.7283 percent on Monday.
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