Indian shares at two-month high

Indian shares rose for a fifth straight session on Wednesday, to its highest close in nearly two months, riding on world markets which gained on expectations that Greece will ward off bankruptcy and avert the eurozone's first sovereign default. But dealers believe that the rally has no legs and see the gains as temporary, as worries over India's inflation and rising interest rates continue to plague the outlook.
Financials led the gains, in an attempt to catch up after a poor performance this year. The sector index firmed 0.9 percent, but is still down 5.4 percent year to date. The 30-share BSE index gained 1.09 percent, or 201.41 points at 18,693.86, its highest close since May 2, with 22 of its components gaining ground.
The benchmark had gained more than 5 percent in the previous four sessions on short-covering and buying to boost portfolio values before the quarter draws to a close. The 50-share NSE index gained nearly 1 percent to 5,600.45 points. Advancing shares outnumbered declining ones in the ratio of 1.9 to 1 on the NSE. Around 631 million shares changed hands on the exchange, higher than its 5-day daily average volume of 603 million shares.
"Market is rising on hopes Greece will have a solution to its woes soon," said Nilesh Doshi, president of equities at brokerage Techno Shares. Foreign funds bought around $732 million of shares in three sessions to Monday, latest data from the market regulator showed, after dumping $688 million over the previous nine days.
Persistently high inflation and slowing economic growth have deterred investors from pumping money this year into India - one of the most preferred investment destinations until recently. The index is down nearly 9 percent so far in 2011, making it one of the world's worst performers. Top lender State Bank of India firmed 1.6 percent, while rivals ICICI Bank and HDFC Bank rose 0.4 percent and 2.7 percent respectively. Mortgage lender Housing Development Finance Corp gained 0.9 percent. Cigarette-to-hotels firm ITC firmed 2.9 percent on optimism over the outlook of its non-cigarette businesses, dealers said. Export-driven software companies rose, lifting the sector index 0.7 percent and trimming the year-to-date loss to 12.3 percent.