Indian shares rose 0.5 percent on Monday to their highest close in 20 months on the first trading day of 2010, with auto majors Mahindra & Mahindra and Tata Motors rallying on robust December sales. Investor sentiment was also upbeat after a survey showed the rate of growth in Indian manufacturing rose for the first time in three months in December, with activity reaching its highest since May on sharp rises in new work and output.
Asia's third-largest economy is expected to grow at more than 7.5 percent in the fiscal year ending March, boosted by better growth in the December quarter, the finance ministry's chief economic advisor, Kaushik Basu, said. Trading volume was strong and swelled to 567 million shares.
Traders said this was in line with the trend on new year trading and was partly due to an early start time that kicked off on Monday. Energy giant Reliance Industries raised $577 million through block sales of treasury shares, as it looks to buy bankrupt petrochemicals firm LyondellBasell. The 30-share BSE index closed up 0.54 percent, or 93.92 points, at 17,558.73, its highest close since May 2, 2008. Twenty-three of its components advanced.
Leading utility vehicle maker Mahindra & Mahindra hit an all-time high of 1,138 rupees after it said December sales more than doubled from a year earlier. It closed 4.5 percent higher at 1,129.60 rupees. Top vehicle maker Tata Motors raced 4.4 percent to 827.40 rupees after it reported a 105 percent jump in December sales from a year earlier. The stock rallied to 830.25 rupees in early deals, its highest level since February 2007.
Reliance, which has the heaviest weight on main index, ended down 1.3 percent at 1,075.35 rupees after falling as much as 6.2 percent at one stage following the block sale at a discount to the previous close. Banks and financial stocks firmed as investors were optimistic on the long-term growth prospects for the sector. In the broader market, gainers led losers in a ratio of 2.8:1. The 50-share NSE index closed 0.6 percent higher at 5,232.20.
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