India shares up 0.8 pct, head towards record high

Indian shares rose 0.81 percent to a two-week closing high on Wednesday, with gains led by top lender State Bank of India Ltd. as a strong response to ICICI Bank's record share sale lifted market sentiment.

ICICI Bank, the country's largest private bank, gained 0.4 percent to 947.85, its strongest close since May 18, and has risen 4.4 percent this week. It is selling shares in India and the United States this week to raise up to $4.9 billion.

It took less than an hour on Tuesday to cover the $2.1 billion order book for the local leg. The sale, which closes on Friday, follows last week's $2.4 billion initial public offering by property developer DLF Ltd.

"Although global markets were strong in the last few sessions, Indian markets were largely rangebound because of technical barriers. There is some catching up happening now," said K.K. Mittal, vice-president at Escorts Mutual Fund.

"The confidence in the market is very high after the hugely positive response to ICICI Bank's issue. The overhang of large issues is slowly going away."

The benchmark 30-issue BSE index rose 116.45 points to 14,411.95, with 23 components gaining. The index is 2.1 percent off its all-time high of 14,723.88 hit on Feb. 9.

"The immediate resistance is at 14,500, but it will be crossed because the momentum is very strong. We expect the market to make a new peak by the end of this month," said Subash Gangadharan, technical analyst at HDFC Securities.

For a technical analysis by Reuters, please see: www.reutersindia.net.

State Bank of India rose 3.85 percent to 1,425.20 rupees, its strongest close in two weeks, and Bank of India ended up 4.3 percent at 212.85 rupees, also a two-week closing high. Banks have been riding robust demand for loans, which is growing at more than 26 percent annually, in a fast-expanding economy.

Mortgage firm Housing Development Finance Corp. gained nearly 2 percent to 1,810.35 rupees after CLSA said the firm would gain market share and maintain spreads as banks reduce focus on the mortgage lending to meet demand from other sectors.

The 50-issue Nifty ended 0.82 percent higher at 4,248.65 points. It hit an all-time high of 4,362.95 on June 4.

In the broader market, 1,455 gainers beat 1,126 losers on a volume of 233 million shares.

Elsewhere in the region, Karachi's 100-share index ended 0.46 percent higher at 13,556.73, while Colombo's All-Share index rose 0.55 percent to 2,620.43 points.

STOCKS THAT MOVED

* Sterlite Industries Ltd. rose 8 percent to 604.60 rupees after its American depositary shares made a strong debut on the New York Stock Exchange, ending 9.4 percent higher than the offer price of $13.44.

* Blue Dart Express Ltd. rose 11.4 percent to 778.70 rupees on market talk of a share buyback, traders said. A Blue Dart spokesman said the company would not comment on market speculation.

TOP 3 BY VOLUME

* Voltas Ltd. on 7.6 million shares.

* G.V. Films Ltd. on 7.6 million shares.

* Reliance Natural Resources Ltd. on 7.3 million shares.