Wednesday, 12 September 2012

Indian shares hit 7-mth closing high at 18K; airlines jump on FDI hopes

Indian shares hit 7-mth closing high at 18K; airlines jump on FDI hopes
Clean Media Correspondent

    MUMBAI, Sept 12 (CMC) - India's BSE index rose for a
sixth consecutive session to close at its highest since Feb. 23
on rising hopes for government reforms after the aviation
minister signalled the country was moving to allow foreign
direct investment into the sector. 
   Allowing foreign carriers to invest in the sector would help
cement expectations for further government action, with
investors also hopeful India will open up the multi-brand retail
sector and raise fuel prices to lower its subsidy burden. 
    Gains in local shares on Wednesday also tracked a risk-on
mood globally, after Germany's top court backed the legality of
the euro zone bailout funds, although with conditions.

    Investors are also hopeful the Federal Reserve will announce
new U.S. asset purchases when it concludes its two-day meeting
on Thursday, although some analysts warned of the dangers of
relying on liquidity that is driven by global risk factors.
    "The path is laid for FDI in aviation to go through,"said 
Ambareesh Baliga, chief operating officer at Way2Wealth
    "International cues such as German court ruling are triggers
which will take the market up for a while. But markets cannot
sustain those higher levels unless you have a fundamental
domestic reason to keep it up," Baliga added.
    India's benchmark BSE index rose 0.82 percent to
end at 18,000.03 points, just above the psychologically key
level of 18,000 points.
    The 50-share NSE index rose 0.76 percent to mark its
highest close since March 14. 
    Data on Wednesday showing India's industrial output rose 0.1
percent in July, just below expectations for a 0.3 percent
increase, had little impact in markets. 
    Instead, investors cheered comments from India's civil
aviation minister Ajit Singh saying he had talked to most of the
government's political allies on opening up the sector, raising
hopes action could be near. 
    Policy reforms are seen key for a country facing ratings
downgrades into sub-investment grade. 
    HSBC downgraded Indian stocks to "underweight" from
"neutral" on Wednesday, citing the government's lack of progress
in fiscal or structural reforms as a key factor. 

    SpiceJet Ltd gained 7.12 percent, its biggest
percentage gain since Aug. 7.
    Under current rules, foreign airlines are barred from buying
stakes in domestic carriers, although foreign investors are
allowed to hold a cumulative 49 percent.   
    Kingfisher Airlines, which has been reeling under
heavy debts, advanced 8 percent, while Jet Airways rose
4.85 percent.
    Shares in Tata Motors gained 5.38 percent, marking
a sixth day of gains on anticipation of a boost in sales when
the auto maker releases a fourth-generation Range Rover in
    Shares in Gujarat State Petronet Ltd gained 3.8
percent, after Petroleum & Natural Gas Regulatory Board (PNGRB)
cuts tariffs to transport gas via high pressure networks in the
state of Gujarat by less than expected. 
    Apollo Tyres jumped 6.46 percent to 99.65 rupees,
after Bank of America-Merrill Lynch raised its target price to
135 rupees, predicting profit margins would continue to improve
on the back of a better sales mix and pricing discipline, among
other factors. 
    However, shares in Reliance Mediaworks dropped 2.6
percent on worries about its loan exposure after Digital Domain
Media Group Inc filed for bankruptcy protection.

    Shares in the Indian unit of Siemens fell 2.7
percent after the German company sold 1.1 pct of its stake via 8
block deals. 
    Siemens had been looking to sell about a 1.2
percent stake in a deal meant to raise up to $50 million,
according to a term sheet seen by Reuters on Tuesday.

    For more stocks on the move, double click      
    FACTORS TO WATCH                                            
* Euro rally after German court verdict                  
* Oil gains on euro zone bailout, Fed hopes               
* Euro bailout fund approval boosts global stocks   
* Foreign institutional investor flows         
* For closing rates of Indian ADRs       

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