Saturday, July 07, 2007

Indian stocks jump to record high

Traders in Mumbai
India's economic performance has been a driver of demand for shares
India's main stock index, the Sensex, has burst through the 15,000 mark, surging to a record on optimism about economic growth and corporate profits.

Bombay's Sensex closed 102.23 points, or 0.7%, higher at 14,964.12. It rose as high as 15,007.22 on Friday, taking gains for the week to more than 2%.

Official data on Friday showed that inflation had eased, making it less likely that interest rates will rise.

Gains may continue thanks to the strong economic environment, analysts said.

Better figures

"We expect Indian corporates to show sound earnings data, which could keep the markets buoyant," said Naresh Garg of Sahara Mutual Fund.

Andrew Holland of DSP Merrill Lynch said: "We expect the markets to remain strong over the short term, probably ending the year higher than they are now."

The Sensex has gained almost 9% this year, extending last year's near 50% surge.

Underpinning the stock market has been foreign demand for Indian shares, as investors try to tap into one of the world's best-performing economy.

At the same time, domestic demand has also remained steady.

"Investors have been positively surprised by the stronger-than-expected appetite for issuance over the past month and also by favourable inflation data," said Rajeev Malik, an economist at JP Morgan Chase Bank.

Software services companies Tata, Infosys and Wipro led gains on Friday, closing 4.4%, 2.9% and 3% higher respectively.


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