Indian shares started 2011 on a firm footing, climbing nearly 0.3 percent on Monday, with metal producers leading the gains as investors placed bets that the base metals rally was here to stay. Firm world stocks also supported the gains. "There are no immediate negatives for metal stocks," Neeraj Dewan, director of Quantum Securities.
"The pack has been performing well on optimistic metals price outlook. Also, some companies hiked steel prices today." Non-ferrous metals producer Sterlite Industries, part of London-listed Vedanta, rose 3.1 percent. Media reports said the company had raised copper prices but company officials were not immediately reachable to comment.
Steel Authority of India firmed 3 percent after the country's largest domestic steelmaker raised prices of its products by an average 1,000 rupees a tonne. Tata Steel, world's seventh-largest maker of the alloy, rose 3.6 percent on expectations it may follow suit.
The 30-share BSE index rose for the fourth straight session and climbed 0.25 percent, or 51.96 points, to 20,561.05 points, with two-thirds of its components gaining. The 50-share NSE index gained 0.4 percent to 6,157.60. Foreign funds poured in $29.3 billion in 2010, driving the benchmark index more than 17 percent higher, and market participants expect the interest to continue strong in 2011.
The index gained 2.2 percent in the December quarter, its eighth straight quarterly gain. India's manufacturing sector expanded at a slower pace in December than in the previous month, weighed down by a weakening growth in factory output and new orders, a survey showed. But the December reading marked the 21st consecutive month that the key index of manufacturing in Asia's third-largest economy has been above the reading of 50, which divides growth from contraction.
Banking stocks advanced on expectations that loan demand would rise in the world's second-fastest growing major economy. Lenders State Bank of India and HDFC Bank gained 0.4 percent and 1.9 percent respectively. ICICI Bank bucked the trend and shed 0.1 percent. Most auto stocks erased most of early gains on profit booking, dealers said. They had rallied early, cheering robust sales for December.
Hero Honda closed flat. It had risen as much as 1.7 percent after the top motorcycle maker said its December sales rose by a third. Tata Motors closed barely changed after climbing as much as 2.1 percent after it posted a 31 percent rise in December sales and raised prices of some vehicles. Bajaj Auto dropped 4.2 percent even as it reported a 10 percent increase in December sales, as it failed to meet street expectations, dealers said.
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