Indonesian share prices closed 0.25 percent higher on Tuesday, after a cabinet reshuffle raised hopes for the economy and Bank Indonesia delivered a rate hike in line with expectations, dealers said.
They also said blue chips like Astra International and Indosat, along with banking stocks, drove the market higher although profit-taking in Telkom and Perusahaan Gas Negara capped the gains.
The Jakarta Stock Exchange composite index closed up 2.857 points at 1,123.435 on volume of 1.07 billion shares valued at 1.01 trillion rupiah (101.61 million dollars.). Advancers led decliners 62 to 54, with 61 stocks unchanged.
The rupiah was at 9,930/9,940 to the dollar compared to Monday's level of 9,955/9,960.
On Monday evening, President Suilo Bambang Yudhoyono named former finance minister Budiono as co-ordinating minister for the economy and Sri Mulyani Indrawati as finance minister.
Both personalities are seen to be capable of stabilising the country's economy amid a surge in inflation and a weak exchange rate, analysts have said. Indrawati Tuesday promised more prudent fiscal management and effective fiscal spending. Sinaga said although the move had been anticipated, Bank Indonesia's rate hike helped sustained the market's rise.
Bank Indonesia today raised its reference interest rate, known as the BI rate, by 50 basis points to 12.75 percent. The latest move is far less aggressive than last month's increase of 125 basis points and analysts believe it signals a slowing down in the central bank's interest rate hikes. Banking stocks reacted positively to the BI rate hike, Sinaga said. For Wednesday, he said the market could undergo a healthy correction after rising for the past three trading days.
Car dealer Astra International rose 250 rupiah to 9,650 while its heavy equipment unit United Tractors added 25 to 3,675.
Bank Central Asia added 50 to 3,400, Bank Mandiri rose 20 to 1,400 while Bank Permata added 90 to close at 600. Indosat gained 50 to 5,700 while Telkom lost 50 to 5,600.
State gas distributor Perusahaan Gas Negara dropped 300 to 6,650 ending its upward trend seen since late September.
Cigarette firm Gudang Garam gained 150 to close at 11,000.