Indian shares edged up 0.1 percent on Monday, as software majors soared to a record high on optimistic outlook for the sector, but upside was limited due to low activity as the year-end neared. Hero Honda jumped 18 percent, its best single-day gain in at least two years, as Bank of America-Merrill Lynch raised its rating on the top motorcycle maker to "buy" from "neutral," with worries over the financial impact from Honda's exit from their India motorcycle JV subsiding.
After market hours on Thursday, Hero Honda chief executive Pawan Munjal said Hero's royalty payment to Honda would start declining from next year. The 30-share BSE index firmed 0.12 percent, or 24.03 points, to 19,888.88 points, with 17 of its components declining. Indian markets were shut on Friday for a public holiday. The 50-share NSE index closed barely changed at 5,947.05 points.
"Market is just consolidating. We need to be happy about the fact that it isn't coming off, which is a possibility when we approach a year end," said Gajendra Nagpal, CEO of Unicon Financial. "There are no strong positive triggers and we aren't seeing any big bad news either."
Market participants at large are optimistic about the prospects for 2011, backed by strong economic growth in the world's second-fastest growing major economy. "We should register gains in 2011, as emerging economies like India promise good growth opportunities," said Nagpal.
In the broader market, gainers outpaced losers in a ratio of 1.1 to 1 in a low volume of 281 million shares. Emerging market equity funds extended their inflow streak to 29 weeks, and for the year-to-date they have taken in almost $90 billion, global fund tracker EPFR said over the weekend.
India's benchmark has risen nearly 14 percent in 2010, backed by $28.4 billion of foreign portfolio investment. The index has outperformed Brazil's Bovespa and China's Shanghai Composite Index, which have dropped 0.9 percent and 12.9 percent, respectively, in the year-to-date, but fallen short of Russian RTS index's 20.5 percent gain.
Oracle Corp's and Accenture's forecast-beating quarterly earnings last week and optimistic outlooks, lifted the mood for the software industry. Leading outsourcer Tata Consultancy Services rose nearly 3 percent to a record high of 1,174.50 rupees, while Infosys Technologies gained as much as 2.1 percent to an all-time high of 3,363 rupees.
SKS Microfinance, the country's only listed microfinance lender, tumbled 9.5 percent to a record low of 599 rupees on the back of renewed fears about the sector's future profitability.