India's benchmark share index hit a sixth straight record high yesterday and closed above 15,000

The Sensex crossing the 15,000-mark has left currency dealers anticipating another milestone event in the money market — a breach of the Rs 40-mark by the US dollar. With the central bank being unmoved with the dollar falling below the 40.5-mark, both economists and multinational banks feel that there is a strong likelihood that the rupee may trade between 39.80-40 levels against the dollar in the near future.

Just a few months ago, certain research houses and multinational banks had revised their bearish forecasts for the rupee (made before March 2007) and replaced them with a less bearish forecast of the dollar at 42.50-43 levels by December 2007. However, seeing the global movements, the forecasters are set to review their stance. Standard Chartered Bank’s MD and regional head, global markets and South Asia, Sundeep Bhandari, explained,

“We have kept our forecast for December 2007 (at 42.50 levels against the dollar) under review. The 40-mark is indeed a huge milestone for the rupee, which the central bank is unlikely to allow.” Treasury managers feel that the rupee is largely strengthening on the back of a buoyant stock market. While the forex market is expected to be extremely volatile, they feel that traders would continue to test the rupee at higher levels.

For a long time, the rupee had been hovering above the 40.50-mark per dollar. This was one level which even the central bank was seen protecting. Usually, when the rupee starts growing stronger, the central bank tries to prevent it from rising too much within a shorter span of time, by purchasing dollars and infusing rupee-funds into the market.

However, between March and June, the central bank was more concerned about the spiralling price levels, with the wholesale price index quoting over 6%. Now, what happens is that when the central bank tries to protect the rupee by buying the greenback, it ends up selling rupees and this forces the cash flows to rise, thus impacting inflation levels negatively.

This was why the central bank allowed the rupee to rise, in a bid to curb price levels from rising further. Thus, between March and June alone, the rupee rose by over 8.5%. Kotak Mahindra Bank’s treasurer Mohan Shenoi said, “Fresh flows into public offerings and secondary market and hedging by exporters is leading to strong supply of dollars. Dollar purchases made by oil companies and intervention by the central bank to absorb flows are keeping the support at Rs 40.40 intact for the time being.”

Mr Shenoi pointed out that in line with the overall monetary policy considerations, if the central bank stops absorbing capital flows even temporarily, the rupee could rise to even the 39.80 level per dollar. However, if it falls to 40.70-40.80 levels, it may attract large scale dollar sales by exporters, he added. Other factors, which could lay brakes on the rising local currency, could be the rising oil prices and a growth in government spending, which tends to pick up in the second half of the financial year.

ICICI Bank chief economist Samiran Chakraborthy pointed out that the appreciation in the rupee may recede, once the pipeline of FII inflows cease. Oil prices could serve as the third trigger for short-term movement in the rupee as demand for dollars from oil companies may even cause the local currency to weaken.”
India's benchmark share index hit a sixth straight record high yesterday and closed above 15,000 for the first time, buoyed by gains in software services and telecoms stocks on expectations of good quarterly results.

Export-driven software services firms such as Infosys Technologies and Tata Consultancy Services extended gains even as some analysts expected them to report their earnings were hit by the rupee's rise of almost 7 per cent against the dollar in the June quarter.

"There is a feeling that the overall business visibility is still high," said Sandeep Neema, a fund manager with JM Financial Mutual Fund.

"Guidance in dollar terms could remain the same or could be upped in some cases, and people are not expecting any significant further appreciation in rupee for the time being at least."

The 30-share BSE index ended up 0.55 per cent, or 81.61 points, at a record close of 15,045.73, after rising to a record high of 15,085.22 during trade.

The index has risen 2.7 per cent so far this month, hitting a record high each day.

More gains were expected. Citigroup expects the index to reach 16,000 by year end, and 18,400 at the end of 2008.

Citigroup said it was "overweight" on banks, capital goods, information technology services, telecom and media stocks, and was "underweight" on energy, materials, pharmaceuticals and utilities.

Second-ranked software exporter Infosys, which kicks off the results season for the sector on Wednesday, rose 1.1 per cent, and sector leader Tata Consultancy rose 1.5 per cent. Both stocks posted their highest closes since June 15.

Infosys is forecast to report a rise of more than 21 per cent rise in net profit for the June quarter, a Reuters poll showed.

Engineering and construction firm Larsen & Toubro Ltd, which reports its results on July 19, hit a record high during trade before closing up 2.2 per cent. The stock has gained 21 per cent since the end of May.

Shares in top mobile firm Bharti Airtel Ltd gained 2 per cent on expectations strong subscriber growth would help it post a better-than-expected rise in earnings, traders said.

Twenty-one of the benchmark index's component stocks rose. In the broader market, 1,626 gainers beat 1,036 losers on volume of 267.6 million shares.

The 50-share NSE index ended up 0.79 per cent at a record close of 4,419.40, after hitting a lifetime high of 4,427.55 during the day.

Elsewhere in the region, Karachi's 100-share index added 0.25 per cent to a record close of 14,020.90, after hitting a lifetime high of 14,079.26. But Colombo's All-Share index ended 0.52 percent lower at 2,510.92, its lowest close since May 30.

Asian stocks closed higher on Monday, with more records tumbling, with investors picking up on a solid US employment report to signal the US economy has got through its first quarter soft patch and is in sound health once more, dealers said.

They said further gains on Wall Street on Friday after the slightly better than expected June new job figures got the region off to a good start while a continued Chinese rebound after recent volatility added to the positive tone. That helped offset jitters over rising oil prices but the jury remains out on the outlook for inflation and interest rates � the US data suggested the Federal Reserve will not now cut lending costs but will it raise them instead? Those concerns, however, could not trump the more than ample liquidity in the markets.

At current levels, investors still see value in stocks given the relatively low cost of funds, with Sydney, up 0.78 per cent to a record finish, said confidently to offer more upside still. That was the view too in Mumbai, up 0.55 per cent to hold above the historic 15,000 points level in another record performance.

Bangkok added 1.42 per cent and Taipei put on 1.98 per cent, with the two markets seen as laggards in the region and offering even better value despite some political reservations in both.

Hong Kong share prices rose 1.27 per cent as follow-through interest in blue chips helped the market extend its record-breaking run to a fifth straight session, dealers said. They said expectations of strong first-half results from major listed firms also encouraged investors to continue building positions. Select China-related stocks were boosted by strong liquidity and hopes of further easing of overseas investment rules on the mainland, they added.

The Hang Seng Index closed up 285.69 points at 22,817.43, off a low of 22,601.65 and just off a new all time-high of 22,818.32. Turnover was heavy at 102.71 billion dollars (13.2 billion US).

TOKYO: Japanese share prices closed at a fresh seven-year high, lifted by better-than-expected machinery orders data, a weaker yen and a positive lead from Wall Street, dealers said.

The Tokyo Stock Exchange�s benchmark Nikkei-225 index of leading shares climbed 121.04 points or 0.67 per cent to 18,261.98. The broader Topix index of all first-section shares added 12.56 points or 0.71 per cent to 1,792.23.

Gainers beat decliners 1,125 to 462, with 140 stocks flat. Turnover rose to 1.7 billion shares from 1.68 billion on Friday.

SHANGHAI: Chinese share prices closed 2.69 per cent higher, extending sharp gains from the end of last week amid optimism that the market may have steadied after recent volatility, dealers said. Investors turned more confident in the absence of any measures from the government over the weekend to cool the economy and stocks, while they were also upbeat over projections for first-half corporate results, they said. On Friday, the market advanced 4.58 per cent, the biggest single-day rise in six months with buyers bargain-hunting after the benchmark Shanghai Composite tumbled 5.25 per cent on Thursday amid concerns over liquidity.

The benchmark Shanghai Composite Index, which covers both A- and B-shares listed on the Shanghai Stock Exchange, closed up 101.87 points or 2.69 percent at 3,883.22.

Turnover rose to 99.41 billion yuan (13.08 billion US dollars), from 92.31 billion yuan in the previous session, reflecting the improved sentiment.

The Shanghai A-share Index was up 106.82 points or 2.69 per cent to 4,074.95 on turnover of 98.09 billion yuan and the Shenzhen A-share Index added 36.38 points or 3.27 per cent at 1,149.30 on turnover of 56.07 billion yuan.

TAIPEI: Taiwan share prices closed sharply higher, up 1.98 per cent and at the day�s highs in active trade as investors built on last week�s gains in light of a supportive US employment report, dealers said.

The market hit fresh seven-year highs and is now running at its best levels since President Chen Shui-bian came to power in May 2000. The weighted index added 181.53 points at 9,369.84, off a low of 9,239.20, on turnover of 227.08 billion dollars (6.92 billion US).

Risers led decliners 945 to 415, with 152 stocks unchanged. �There seems only one way to go and that is up,� said SinoPac Securities assistant vice president Alvin Teng. �The market is now firmly riding on a wave of liquidity run towards 10,000 points,� he said. �(It) is no more than a matter of time.�

SEOUL: South Korean share prices rose 1.21 per cent for another record finish after Wall Street�s advance, with investors betting that companies will report positive quarterly earnings, dealers said.

They said the gains were led by Samsung Electronics and KEPCO although fears lingered that the Bank of Korea could hike interest rates later this week.

The KOSPI index closed 22.58 points higher at 1,883.59, after hitting an intra-day high of 1,890.83 and a low of 1,865.79. Volume was 427 million shares worth 7 trillion won (7.6 billion dollars).

SYDNEY: Australian share prices rose 0.78 per cent to chalk up another record finish, with the key resource stocks once more leading the way, dealers said.

The benchmark Straits Times Index jumped 64.76 points to 3,626.72, within touching distance of the record finish of 3,639.49 set on June 21. Volume was 4.58 billion shares worth 2.56 billion dollars (1.67 billion US). Gains led falls 633 to 263, with 612 stocks unchanged.

KUALA LUMPUR: Malaysian share prices closed 0.35 per cent higher, supported by gains in select blue-chips in the oil and gas and construction sectors, dealers said.

The Kuala Lumpur Composite Index gained 4.85 points at 1,378.69. Volume was 1.366 billion shares worth 2.13 billion ringgit (619.2 million dollars) while gainers led losers 584 to 345 and 280 stocks were unchanged.

BANGKOK: Thai share prices closed 1.42 per cent higher, as foreign funds continued flowing into the region, pushing the market to a fresh 10-year high, dealers said.

They said sentiment was upbeat on encouraging US economic data, while investors bought local big-cap energy stocks as global oil prices rose. The Stock Exchange of Thailand (SET) composite index added 11.81 points to 844.19 points and the blue chip SET 50 gained 9.23 points to 604.82.

Gainers led losers 246 to 122 with 100 stocks unchanged on volume of 6.9 billion shares worth 40 billion baht (1.18 billion dollars).

Dealers said stocks continued firmer following a jump of more than seven per cent last week, when the Thai index reached its highest level since the 1997 Asian financial crisis.

JAKARTA: Indonesian share prices jumped 1.99 per cent to another record close, driven by Wall Street�s gains and expectations of strong first-half corporate results, dealers said.

The Jakarta Stock Exchange composite index rose 44.293 points to 2,271.344, off a new intraday high of 2,272.719. Volume was 4.96 billion shares worth 5.74 trillion rupiah (635.31 million dollars).

MANILA: Philippine share prices closed 0.39 per cent lower in lackluster trade, with investors cashing-in on recent gains, dealers said. Investors also stayed on the sidelines while awaiting fresh leads and the release of corporate results for the second quarter due to start later this month, they said.

The composite index finished down 14.79 points at 3,744.05, coming off a high of 3,779.20 before profit-taking. Turnover was 2.8 billion shares worth 3.2 billion pesos (69.5 million dollars). Declines led gains 64 to 44, with 64 stocks unchanged.

WELLINGTON: New Zealand share prices closed 0.36 per cent higher, as a retreat by the strong New Zealand dollar boosted stocks of exporters, dealers said.

The benchmark NZX-50 gross index was up 15.12 points at 4,238.65 on turnover worth 83.57 million dollars (64.79 million US). Rises outnumbered falls 64 to 34. Despite a one-cent fall in top stock Telecom to 4.61 dollars, �having the currency ease back has given our market a bit of a boost,� said David Le Breton of ASB Securities.

MUMBAI: Indian share prices rose 0.55 per cent to chalk up another record finish, this time holding above the historic 15,000 points level in trade led by software and telecom stocks, dealers said. They said buying sentiment improved on sustained interest in software and telecom companies against a backdrop of fast-paced economic growth in the South Asian economy.

The benchmark 30-share Sensex index closed up 81.61 points to a record 15,045.73, just off an intraday high of 15,085.22.

The previous intraday record of 15,007.22 was set on Friday. The rupee was at near decade highs of 40.41 against the dollar.

This was a historic day with a new record close. Software earnings data concerns appear to have eased but a correction is expected soon,� said Hiten Mehta, a fund manager at Fortune Financial Services. Indian software companies bill most clients in dollars and a strong rupee could hit earnings.