Continued foreign fund inflows propelled Indian shares to post their best single-day gains in five months and close 2.4 percent higher on Wednesday, with firm world equities also supporting the bullish sentiment. Outsourcers gained on expectations of strong September quarter earnings, with bellwether Infosys Technologies set to unveil its results on Friday. Infosys gained 2.5 percent.
The 30-share BSE index closed 484.54 points higher at 20,687.88 points, with 28 of its components closing in the green. The benchmark has risen 18.5 percent so far in 2010. It is only a sniffing distance away from its highest levels since January 2008 and around 500 points short of registering a new record high. Foreign funds have poured in $21.7 billion into Indian equities year to date.
Indian stocks have outperformed their BRIC peers Brazil, Russia and China so far in 2010. This month, RBS Equities said it expects healthy 6-7 percent dollar revenue growth for the top four outsourcing firms, with about 1 percent cross-currency tailwind. The brokerage also said it expects profit after tax of the top four to improve 8 percent quarter-on-quarter.
Leading IT services firm Tata Consultancy Services and third-ranked Wipro gained 4.6 percent and 4.5 percent respectively. Financials gained as investors were optimistic about the loan demand outlook in a fast-expanding economy. Leading lenders State Bank of India, ICICI Bank and HDFC Bank rose between 1.9 percent and 2.5 percent. Mortgage lender Housing Development Finance Corp rose 4.6 percent.
Metal producers rose sharply mirroring a huge jump in base metal prices. Copper prices in London and New York extended gains to touch 27-month highs, while Shanghai zinc futures hit their highest since April, buoyed by a fall in the dollar and expectations of US stimulus measures.
Non-ferrous metals producer Sterlite Industries and aluminium producer Hindalco jumped 2.3 percent and 2.7 percent respectively. Tata Steel, the world's seventh-largest steelmaker, firmed 0.8 percent. The 50-share NSE index gained 2.4 percent to 6,233.90 points.