New Delhi: Shares rose 3.2 per cent on Monday to their highest close in nearly a week, boosted by a nuclear trade ban waiver that raised hopes for large investment in the country.
Sentiment was also bolstered after the United States moved to take control of top mortgage firms Fannie Mae and Freddie Mac, triggering a global stocks rally with the European stocks rising about 4 per cent and MSCI All-Country World index up nearly 2 per cent.
Traders said the day's trend was set by the 45-member Nuclear Suppliers Group (NSG) nations decision on Saturday to give a one-off waiver allowing them to do business with India.
Shares in power producer NTPC Ltd and infrastructure play Larsen & Toubro rose 4.6 per cent each on hopes the firms would be able to clinch nuclear energy deals, while power equipment maker Bharat Heavy Electricals gained 3.4 per cent.
"Today's move is more because of the NSG approval than the global factors. There are hopes that this will translate into lots of foreign direct investment in the sector and boost the economy," said Jigar Shah at Kim Eng Securities India.
India produces just 3 per cent of its energy from nuclear power and JPMorgan estimates a successful Indo-U.S. nuclear deal could translate into orders of about $10 billion in the next five years as firms set up new capacity and upgrade the existing.
Industry lobby group Confederation of Indian Industry said it expected about $27 billion investment in nuclear power in the next 15 years. The 30-share main BSE index rose 3.18 per cent, or 461.14 points, to 14,944.97, its best close since September 2, with all the components gaining.
The benchmark is still down more than 26 per cent on the year and analysts said oil prices, high inflation and uncertainty over interest rates were hurdles for a smooth ride. India's annual inflation is running at above 12 per cent, even as data showed a second week of easing to 12.34 per cent in the week ended August 23.
Oil rose on Monday as Hurricane Ike spun towards the U.S. oil hub in the Gulf of Mexico while traders awaited OPEC's decision this week on output policy. "All these factors would not allow a one-way rally. You will see profit-booking on every rise," Shah said.
Banks rose on optimism the damage of the global financial crisis would be moderated after Washington took over top mortgage firms Fannie Mae and Freddie Mac, triggering a global stocks rally.
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