Indian shares rise 3 pct; Reliance, TCS rally

Published: 20 Jul 2009 03:04:39 PST

* Positive earnings boost global investor appetite

* Reliance Ind gains 5 pct as hearing begins on gas dispute

* Tata Consultancy surges 15.3 pct after Q1 profit rise (Adds closing prices, details on Reliance firms, analyst comments, European markets performance)

MUMBAI, July 20 - Indian shares rose 3 percent on Monday to their highest close in 5 weeks as a last-minute rescue seen for troubled U.S. lender CIT Group <CIT.N> and a raft of positive earnings fuelled global appetite for riskier bets.

Reliance Industries <RELI.BO>, controlled by billionaire Mukesh Ambani, led the gains after India's highest court asked the energy giant and former group firm Reliance Natural Resources <RENR.BO> why a gas pact between the two should not be cancelled. [ID:nHKG436514]

The government made a petition over the weekend to intervene in the case, arguing the gas was its property and the private pact between Mukesh and estranged younger brother Anil over the gas was not valid.

"If the government succeeds in making the gas-supply agreement null and void, Reliance Industries will be free to sell the gas at market prices," Hitesh Agrawal, head of research at Angel Broking said.

"The market has sensed that the advantage is with Reliance Industries."

Reliance Industries, India's largest-listed firm with the most weight in the main index, rose 5 percent to 2,030.65 rupees. The company had challenged a lower court ruling to supply gas to Reliance Natural at a below-market price.

Reliance Natural, controlled by Anil Ambani, dropped 2.7 percent to 80.75 rupees. Group firms Reliance Infrastructure <RLIN.BO> fell 1.2 percent to 1,135.85 rupees and No. 2 telecoms firm Reliance Communications <RLCM.BO> eased 1.1 percent to 270 rupees.

Tata Consultancy Services Ltd <TCS.BO>, the country's top IT-services firm by sales, surged 15.3 percent to 500.10 rupees, its best one-day percentage gain, after it beat forecasts with a 22 percent rise in quarterly profit. [ID:nBOM352657]

The news also sparked interest in other outsourcers, with No. 2 player Infosys Technologies <INFY.BO> gaining 5.7 percent to 1,972.70 rupees and smaller rival Wipro <WIPR.BO> climbing 7.1 percent to 460.05 rupees. All three stocks closed at their best levels in more than a year.

The 30-share BSE index <.BSESN> ended up 3.03 percent, or 446.09 points, at 15,191.01 points, its highest close since June 12. Twenty-four of its constituents rose.

The benchmark had climbed 9.2 percent last week, the best among major markets in Asia -- as the government raised hopes for financial reforms and monsoon rains, crucial to India's domestic-demand powered economy, picked up after a weak start.

Several factors, including ample global and local liquidity, a recovery in earnings growth and strong corporate balance sheets, will spur the market over the next 12 months, Morgan Stanley analyst Ridham Desai said.

"Indian equities are in a sweet spot. We would continue to buy the dips in the market," he said.

A spike in risk-appetite worldwide also underpinned the market, with record low global interest rates and trillions of dollars in stimulus spending appearing to help the world recover from the worst recession in 80 years.

A source close to the situation told Reuters U.S. lender CIT Group Inc's board signed off on a deal late Sunday for $3 billion in rescue financing from a group of bondholders, in a plan the lender hopes will stave off bankruptcy, further boosting sentiment. [ID:nN19323064]

The BSE index, which had tumbled 9.4 percent in the first week of July after the government's budget disappointed investors looking for bold financial reforms, has bounced back and is up 57 percent this year after slumping by more than half in 2008.

The benchmark has leapt 89 percent from a 2009 low in early March, riding a stocks rally that has swept across the globe.

In the broader market, gainers led losers by more than 2 to 1 on relatively moderate volume of 445.6 million shares.

The 50-share NSE index <.NSEI> rose 2.9 percent to 4,502.25.

Asian shares rose to their highest since around the time of the collapse of Lehman Bros in September, with MSCI's measure of Asian markets excluding Japan <.MSCIAPJ> rising 3 percent. Japan's Nikkei <.N225> was closed for a public holiday.

At 1041 GMT, the pan-European FTSEurofirst 300 <.FTEU3> index of top shares was up 1.7 percent.

MAIN TOP 3 BY VOLUME

* Satyam Computer <SATY.BO> on 34 million shares

* Reliance Natural Resources on 23.9 million shares

* IFCI <IFCI.BO> on 18.5 million shares

STOCKS THAT MOVED

* Allahabad Bank <ALBK.BO> gained 9.3 percent to 86.80 rupees after the state-run lender beat forecasts by posting a more than threefold rise in April-June net profit. [ID:nBOM137009]

* Chemical maker BASF India Ltd <BASF.BO> climbed 9.7 percent to 271.35 rupees after it posted a 12 percent rise in net profit for the June quarter.

FACTORS TO WATCH * For technical analysis double click on www.reutersindia.net * Indian rupee at 2-wk high as dlr tumbles vs majors [INR/] * Indian bond yields up ahead of heavy supplies this wk [IN/] * Dollar struggles, hits 6-week low vs euro [FRX/] * Oil rises to above $64, equities firm [O/R] * World stocks rally on earnings, CIT news [MKTS/GLOB] * Futures point to firmer Wall St open after CIT deal [.N] * For closing rates of Indian ADRs

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