Indian shares up 3 pct as P-note concerns ease |  |
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MUMBAI (Reuters) - Indian shares rose more than 3 percent in morning trade on Tuesday after the market regulator said proposed curbs on use of an overseas investment instrument were not a ban but were to make inflows transparent.
Reliance Industries, the country's most valuable firm and the most heavily weighted stock in the main index, and engineering firm Larsen & Toubro led the gains.
The Securities & Exchange Board chairman said on Monday that foreign institutional investors (FIIs) could apply to register their proprietary sub-accounts and, if they did so within a week, they could continue issuing participatory notes while the application was pending.
Participatory notes (P-notes) are issued by registered FIIs, including to unregistered overseas investors.
The regulator said it would speed up clearance for foreigners keen to invest transparently.
"We believe this has lifted the threat of an imminent selldown of P-note-backed positions held in sub-accounts," brokerage CLSA said in a report.
At 11:26 a.m., the benchmark BSE 30-share index was up 2.95 percent, or 520.40 points, at 18,134.39, with 29 components gaining.
At Monday's close, the index had fallen 7.5 percent since the plans to curb P-notes were announced last week, with foreign investors pulling out a net $1.2 billion in three days.
That has lowered their net investment this year to $16.7 billion, but it is still running well above the full-year record inflow of $10.7 billion in 2005.
Reliance Industries was up 4.6 percent at 2,522 rupees, while Larsen & Toubro and Bharat Heavy Electricals -- both infrastructure plays -- rose more than 6 percent.
"Our preferred stocks are domestic plays, backed by secular growth drivers," CLSA analyst N. Krishnan said in the note.
CLSA also said it expected a "quality rebound" in fundamentally sound stocks that were held largely through participatory notes.
The brokerage last week said Housing Development Finance Corp, ICICI Bank, Bharti Airtel and Axis Bank were a few of the stocks that had relatively large holding through participatory notes.
Leading mobile operator Bharti Airtel rose 6.2 percent, and Axis Bank gained 4.3 percent.
Satyam Computer Services, India's No. 4 software services exporter, was up 2.8 percent at 461.20 rupees after it reported a larger-than-expected 28 percent rise in September quarter profit to 4.09 billion rupees.
In the broader market, 1,895 gainers outpaced 473 losers on volume of 132.5 million shares.
The 50-share NSE index was up 3.58 percent at 5,369.60.
Elsewhere in the region, Karachi's 100-share index was up 0.83 percent at 14,721.76, and Colombo's All-share index gained 0.18 percent to 2,616.89.
STOCKS THAT MOVED
* Suzlon Energy Ltd was up 13.1 percent at 1,793 rupees after a strong rise in net profit, board approval to split each share into five, and on its plan to list its Belgian subsidiary in London.
* News broadcaster Zee News Ltd was up 5 percent at 57.90 rupees, after its net profit more than doubled for Sept quarter from a year ago.
* Sugar firm EID Parry India Ltd rose 8.9 percent to 142.50 rupees, after it said its board would meet on Oct 29 to consider a buy-back of shares.
TOP THREE BY VOLUME
* Unitech Ltd on nearly 13 million shares
* United Breweries Ltd on 10.4 million shares
* Reliance Natural Resources on 7.4 million shares
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