Indian shares closed at their highest in 1-1/2 months on Tuesday, led by gains in Hindustan Unilever, or HUL, after its parent made a $5.4 billion offer to raise stake in it, while the finance minister’s comments that tax residency certificate is enough proof of residency for tax purposes also helped.
The gains also tracked advances in European share markets as some investors positioned for the European Central Bank and the US Federal Reserve to extend their monetary measures to stimulate economic growth.
The RBI’s policy review and its stance on future rate cuts, especially after the recent slump in commodity prices, are important for the near-term direction of the market, with many analysts saying that a 25 basis point cut seems already discounted at current valuations.
“RBI decision and direction, headroom of future rate cuts is all important now,” said Aneesh Srivastava, chief investment officer at IDBI Federal Life Insurance, who oversees Rs40 billion worth of investments in the capital market. A 25 basis point cut is mostly discounted after the recent rally, Srivasatava added.
The benchmark BSE index rose 0.6 per cent, or 116.68 points, to end at 19,504.18, gaining for the first month in three with a 3.5 per cent rise in April.
The broader NSE index rose 0.44 per cent, or 26.10 points, to end at 5,930.20, closing above the psychologically important 5,900 level, gaining 4.4 per cent for April.
The markets will be closed on Wednesday for the May Day holiday.