MUMBAI (AFP) -Indian share prices closed 0.67 percent higher as an IMF forecast of strong global growth this year led the benchmark Sensex above 12,000 points intraday for the first time since May, dealers said.
They said investor support was strong in banking and software stocks following a report by the International Monetary Fund that the world economy would grow at its fastest pace in three decades at 5.1 percent this year.
The 30-share Sensex hit an intraday high of 12,002.94 points in late afternoon trade before closing up 79.23 points at 11,973.02.
India’s largest software firm, Tata Consultancy Services gained 14.80 rupees or 1.48 percent to 1,012.20 while the country’s largest bank, state-owned State Bank of India, rose 7.10 rupees or 0.73 percent to 976.50.
The Sensex reached a record intraday high of 12,671.11 points on May 11 but then fell sharply over the next six weeks on worries over rising oil prices and US interest rates.
“The markets breached a key level after several days of resistance but volumes remain low, suggesting weakness in the days ahead,” said Manoj Kakaiya, a dealer with brokerage ULJK Securities.
Continued gains for the market hinge on company quarterly earnings for the July-September period due to start in early October, fund managers said,
“I would not be concerned over the longer-term picture, but there should be volatility in weeks ahead” in the run-up to quarterly earnings, said R. Balakrishnan, director with brokerage Parallex Consultancy Services.
Indian shares have risen 19 percent in nearly eight straight weeks, since 10,085.91 on July 21, led by easing inflationary concerns.
Losers led gainers 1,367 to 1,137 on volume of 40.39 billion rupees Wednesday (874 million dollars) and an inflow of foreign fund investment saw the rupee strengthen against the dollar to 46.1 from 46.2 and the euro to 58.5 from 58.65.
Foreign fund buying reached 315.1 million dollars so far in September and close to a billion dollars in August.
“The markets breached a key resistance level after several days,” said Manoj Kakaiya, a dealer with brokerage ULJK Securities.
Another boost for the market was India’s strong industrial output in July of 12.4 percent year-on-year reported this week, the fastest monthly gain in a decade, on the back of strong manufacturing.
The industrial output surge has led most analysts to hold to full-year economic growth forecasts for the year ended March 2007 of eight percent and they also expressed optimism for the following year.
“In fact economic growth could well exceed next year’s projections (of 7.3 percent),” said Bidisha Ganguly, chief economist with brokerage BRICS Securities.
She noted that companies continue to invest in machinery and equipment, or capital expenditure, as a sign that robust growth will continue in India.
“Capex growth is set to be strong despite some infrastructure bottlenecks,” she said.