The BSE Sensex was the best performer in Asia on Thursday rallying nearly 2%, as robust foreign demand for a $3.5 billion IPO by Coal India reaffirmed strong risk appetite.
With the largest-ever Indian IPO closing after heavy bidding, traders expect investors to shift their focus to the secondary market in the run up to Diwali in early November, that also marks the new year for the trading community. Reliance Industries topped the gainers, climbing 2.9% in its best show in five weeks, after being a laggard for the year. Foreigners have been pouring money into emerging markets in the hope of better returns than the slowdown-hit developed world, and analysts expect the inflow to maintain momentum.
?The superb response for Coal India and the fact that it sailed smoothly without causing much jitters in the market has led to expectations that there is enough appetite,? said Ambareesh Baliga, vice-president of Karvy Stock Broking. The four-day Coal India sale closes on Thursday. The 30-share BSE index rose 1.95%, or 388.43 points, to 20,260.58 after a subdued run this week. Twenty-nine of its components advanced. The benchmark is up 16% so far this year, thanks to foreign equity inflows of a record $23.6 billion in the period.
In comparison, its peers such as Brazil?s Bovespa and Russia?s RTS index have gained 2.6% and 9.5%, respectively, while China’s Shanghai Composite Index has shed nearly 9%. Financials climbed as investors bet another possible rate hike at the central bank’s policy review on Noember 2 was unlikely to dent demand for loans in the fast-growing economy. State Bank of India rose 3.3% while rivals ICICI Bank and HDFC Bank firmed 1.5% and 1.2%, respectively.
Bajaj Auto erased most of a 1.5% early rise and ended up 0.3%, after Bank of America-Merrill Lynch cut the Bajaj Auto to underperform from neutral.
Power Grid Corp firmed 1.3% to Rs 105.65 after its CMD said late on Wednesday its follow-on public offer to raise up to $1.9 billion would hit the market on November 9. According to provisional data, advancing shares outnumbered declining ones in the ratio of 1.9:1 in the broader market on moderate volume of 416 million shares.