Indian shares notched their best single-day percentage-point gain in 6 weeks to close 1.2 percent higher on Monday, boosted by in-line corporate earnings, strong July auto sales and a pick up in manufacturing expansion, with firm world equities also supporting sentiment.
Financials led the gains with top private lender ICICI Bank rising as much as 4.2 percent with an in-line 17-percent rise in quarterly net profit, and a 15-percent credit growth forecast in the year to March 2011 as loan demand from corporate and mortgage borrowers remain strong.
Credit Suisse raised ICICI Bank to "outperform" from "neutral" and raised the 12-month target price to 1,079 rupees from 826 rupees. ICICI Bank closed 3.9 percent higher at 939.75 rupees. The 30-share BSE index rose 1.19 percent or 212.92 points higher to 18,081.21, with 25 of its components closing in the green.
The 50-share NSE index or Nifty rose 1.19 percent to 5,431.65 points. India's HSBC Markit Purchasing Managers' Index bounced back in July, driven by new orders and stronger factory output, rising to 57.6 in July from 57.3 in June when it slipped from a multi-year high.
Foreign funds pumped in $10.3 billion into Indian equities so far this year, with the main index rising 3.5 percent. Primary market offerings attracted a part of this inflow. In 2009, foreign funds had invested a record $17.5 billion, which had led to a rally of 81 percent. Mortgage lender Housing Development Finance Corp climbed 1.4 percent.
Top mobile operator Bharti Airtel rose 3.6 percent, as the stock looked attractive at the current price from a long-term perspective, dealers said. Vehicles maker Tata Motors rose 0.2 percent after it said its India July unit sales rose 41 percent, while leading car maker Maruti Suzuki raced 0.9 percent on a 29-percent jump in July sales. Advancing shares outnumbered declining shares in the ratio of 1.5:1 in the broader market, while the BSE clocked a moderate volume of 397 million shares.
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