By Anantharaman Muralikumar
MUMBAI: Analysts predicted further gains next week after Indian shares
rallied for the second day on Friday, buoyed by the government's commitment to
reforms and heavy foreign fund purchases.
The bellwether 30-share index of the Bombay Stock Exchange (BSE) gained three
percent on top of its five percent jump on Thursday.
The index hit a high of 4,731.94 on Friday - up 15 percent from a 10-month
low of 4,109.66 on Wednesday - before retreating to end at 4,693.88, a gain of
139.96 points from the previous close.
"We are some way above the support level of 4,600 and I think 5,000
should be a target to look at early next week," said Arun Kejriwal, head
dealer at Nikko Stock Broker.
The government's announcement of tax breaks for the software and
pharmaceuticals sectors on Wednesday reversed sentiment battered by volatile
global markets and concerns over valuations in technology stocks, analysts said.
Sentiment received a further boost when the Indian parliament approved the
2000/2001 budget (April-March) proposals on Thursday that included
politically-sensitive cuts in subsidies, demonstrating the government's
commitment to reforms.
"A mix of short-covering and heavy value-based foreign fund buying was
witnessed on Friday," said Hiten Sampat, vice-president of equities at
Parag Parikh Securities Ltd.
Foreign funds have net equity purchases of $41 million in the May 2-4 period,
figures from the market regulator showed.
Technology shares and select heavyweights led the gains on Friday with as
many as 16 of the 34 leading software shares ending either limit-up 12 percent
or close to it. The BSE information technology index of 33 leading sector stocks
gained 7.76 percent or 293.38 points to 4,072.39.
Sector leader and index heavyweight Infosys Technologies ended up 4.01
percent at 8,5O0 rupees ($194.8) while Satyam Computer gained 12 percent to
3,274.05 rupees. The two delivered nearly 40 per cent of the BSE 30-share
index's gain.
But, the single biggest contribution came from Hindustan Lever Ltd, a
subsidiary of Unilever Plc, which ended 5.4 percent higher at 2,540 rupees,
boosted by its parent's bid for U.S. group Bestfoods and accounted for 26
percent of the index's rise.
(C) Reuters Limited 2000.