Sensex, Nifty close near two-and-a-half year high

India’s key stock indices – the Sensex and the Nifty – closed at their highest levels in nearly two-and-a-half years on Tuesday, as buying in Reliance Industries (RIL) and banking stocks outweighed the fall in Infosys after it reported a 2.6 per cent drop in quarterly profit.

The Bombay Stock Exchange (BSE) benchmark, Sensex, ended a tad below 18,000 at 17,985.90, up 0.27 per cent, or 48.70 points. This was the highest close for the 30-stock index since February 19, 2008.

The National Stock Exchange’s 50-stock Nifty closed 0.33 per cent, or 17.65 points, up at 5,400.65, its highest finish since February 5, 2008.

“Foreign institutional investor (FII) inflows have increased after the International Monetary Fund (IMF) raised its gross domestic product (GDP) growth forecast for India. That’s pushing the market higher,” said Anita Gandhi, head of institutional sales at Arihant Capital.

FIIs were net buyers of Indian shares worth Rs 784.68 crore in the cash market, provisional data on the BSE website showed. On July 8, IMF raised India’s 2010 GDP growth forecast to 9.4 per cent from 8.8 per cent. Since then, FIIs have invested more than $1.2 billion in the Indian market in just three sessions.

Infosys fell 3.44 per cent, or Rs 99.65, to Rs 2,795.30 on BSE after it reported a drop in profit for the quarter ended June 30. The results also hurt other information technology (IT) stocks; Tata Consultancy Services (TCS) and Wipro fell 2.09 per cent and 0.94 per cent, respectively. The BSE IT index declined 2.68 per cent.

Infosys, which has the second-highest weight (9.71 per cent) in the Sensex, dragged the index by about 62 points. However, a spurt in RIL shares, which closed up 1.8 per cent at Rs 1,074.75 following media reports that the company was in active talks for its third shale-gas deal in North America, contributed 44 points to the rise of the index. Banking stocks ICICI Bank, SBI and HDFC Bank contributed about 33 points.

Mid-cap and small-cap stocks outperformed their larger peers, with the BSE Mid-cap index and the BSE Small-cap index rising 0.72 per cent each.

The market breadth was positive on BSE, with 1,694 stocks advancing and 1,188 declining.