Indian shares shrugged off weak world equities and firmed 0.8 percent to their highest close in more than two weeks on Monday, as telecom stocks rallied in huge volumes on hopes tariffs will rise and improve margins after Bharti Airtel increased call prices.
Top cellular carrier Bharti Airtel's move to increase call prices in some regions could mark a turning point for the world's fastest growing market battered by a vicious price war over the last two years. Bharti rose much as 6.6 percent to 438.20, its highest since October 2009. Smaller rival Reliance Communications soared 16.1 percent at one point.
Idea Cellular gained as much as 10.5 percent to 94.40 rupees, its highest since July 2008. The 30-share BSE index rose for the second day and ended 148.99 points higher at 18,871.29, its highest close since July 8. Twenty-five of its components advanced. Foreign funds were sellers in three sessions last week, trimming the net inflow to $2.7 billion over the past one month.
The 50-share NSE index firmed 0.8 percent to 5,680.30. Around 610 million shares were traded on the NSE, higher than the 90-day daily average volume of 577 million shares, while gainers outnumbered losers in the ratio of 1.4 to 1. All eyes are now set of the central bank's policy review on Tuesday, where it is widely expected to raise interest rates, and investors are also awaiting the Reserve Bank of India's accompanying comments for cues on the outlook for rates. "I believe we might see a 25 basis point hike tomorrow, which is factored in," said Rakesh Rawal, head of private wealth management at brokerage Anand Rathi.
"Also, this could be the last leg of the tightening cycle. so, if that is the case, things could look up from here." Bharti Airtel and Reliance Communications closed 5.2 percent and 15.1 percent higher, respectively, while Idea Cellular gained 8.3 percent at close. Reliance Communications was the most-traded stock on the NSE, with 31.6 million shares traded, more than five times their 90-day average daily volume. Idea and Bharti ranked fourth and seventh in terms of volume on the NSE.
Police say that millions of dollars were paid in bribes to ensure favours for certain firms in 2007/08 when India issued new licences to offer mobile phone services. The state auditor estimated India may have lost up to $39 billion in revenue due to violations during the allocation process. Rawal said he does not hold telecom stocks for his clients and is not planning to buy them until more clarity emerges. Energy major Reliance Industries, which has the heaviest weight on the main index, climbed 1.1 percent after the government approved its plans to sell a stake in some oil and gas blocks to BP in a deal worth up to $7.2 billion.