India's main index rose to its highest close since April 3, as cigarette maker ITC, one of the big blue-chip gainers this year, recovered from steep recent falls, while Reliance Industries gained on hopes for improving refining margins. Indian shares have gained mildly for three consecutive sessions, helped in part by hopes more policy reforms from the government will help extend the strong rally seen last month.
A newspaper report the government was considering allowing foreign direct investment in the country's supermarkets lifted shares in retailers such as Pantaloon and Shopper Stop on Thursday. The global risk environment should be key in the near-term, according to analysts. Sentiment could improve after China's central bank cut interest rates late on Thursday, hours before a widely expected monetary policy easing from the European Central Bank later in the day.
"If China is cutting interest rates, that might be reflection of the fact that they are slowing down substantially," said V.K Vijayakumar, an investment strategist at Geogit BNP Paribas. "Globally interest rate will be heading south." The 30-share BSE index rose 0.4 percent to 17,538.67 points, having gained 13 percent so far this year as of Wednesday's close, compared with a 5.8 percent gain in the MSCI Asia-Pacific index excluding Japan.
The broader 50-share NSE index rose 0.5 percent to 5,327.30 points. A big chunk of gains in Indian shares have come in June, when the BSE index surged 7.5 percent. The advances this month, however, have been milder as investors have consolidated some positions.
On Thursday, cigarette maker ITC was among the leading gainers, advancing 1.8 percent after some investors viewed as excessive a 4.9 percent retreat in the previous three sessions from its record high of 260.4 rupees hit on Monday. ITC has been one of the best performing bluechips this year, gaining 22.3 percent as investors have been attracted by a stock that some see as a defensive consumer play with consistent earnings growth potential.
Reliance Industries rose 0.4 percent, supported by hopes for better refining margins in second half of 2012 and a recent under-performance in the stock. Retailers Pantaloon Retail India rose 3 percent while rival Shopper Stop surged 8 percent after Economic Times reported the government may allow foreign investors to own majority stakes in domestic supermarkets and department stores after the Presidential elections on July 19.
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