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Markets

India shares rise as Sun Pharma paces gains among drug makers

State-run banks also post advances

MUMBAI (NewsRise) -- Indian shares began an event-filled week on a positive note, helped by gains in state-owned banks and drug makers.

The BSE Sensex advanced 0.1% to 35,483.47 and the Nifty 50 climbed 0.2% to 10,786.95. Sun Pharmaceutical Industries led healthcare companies higher on Monday, advancing 1.3% to add to Friday's more than 8% jump after a critical plant was cleared by the U.S. heath regulator. A BSE index of healthcare companies closed 0.5% higher. Cipla rose 0.3% and Dr. Reddy's Laboratories added 0.9%. Alembic Pharmaceuticals jumped 19.9% after receiving approval from the U.S. regulator for an anti-depression drug.

Investors are in for a busy week, one that will see policy decisions by three major central banks and a historic summit between the U.S. President Donald Trump and North Korea's Kim Jong Un. Trump is hoping to convince the Pyongyang leader to begin denuclearizing in exchange for easing of economic sanctions. A day before the meeting, U.S. officials employed an optimistic tone amid a report by North Korea's official news agency that the two leaders would discuss a permanent peace-keeping mechanism on the Korean peninsula.

A positive outcome in the form of a time line for North Korea to disarm itself would prompt a reduction in risk premiums for regional markets, prompting an immediate positive reaction, analysts said.

In addition to the U.S.-North Korea summit this week, traders will have to contend with a Federal Reserve policy outcome on Wednesday in which interest rates will almost certainly be raised by a quarter percentage points. On Thursday, the European Central Bank may possibly outline when it plans to halt its bond purchases. The Bank of Japan rounds up the week with no change in policy stance expected on Friday.

Sageraj Bariya, vice president of institutional sales at Mumbai-based East India Securities, said of the North Korea summit that he would not bet on a positive outcome considering the "maverick nature of both the leaders." However, he remained upbeat on the outlook for Indian equities in the immediate-term, saying that the "the positive momentum is gathering pace" and "the probability of a new high is increasing by the day."

The record closing on the Sensex is at 36,282.25, reached on January 29.

An index of state-owned banks closed 0.3% higher after the country's interim finance minister late Friday said that Bank of Baroda's Managing Director and Chief Executive P. S. Jayakumar will work on a strategy regarding state-run banks taking over the good loans of lenders that are under the country's central bank's Prompt Corrective Action plan.

Shares of Bank of Baroda ended 1% higher and State Bank of India added 0.4%.

Punjab National Bank climbed 1.4% after the lender said it will divest its holdings in PNB Holdings, and credit rating agencies ICRA and CRISIL. A Press Trust of India report that the bank expects to recover 80 billion rupees of loans that have soured in the current quarter also buoyed investors.

PNB Housing Finance dropped 3.3% following a report by The Economic Times, citing two people aware of the development, that private equity firm Carlyle is looking to sell its 33% shareholding in the housing finance company.

ICICI Bank closed 0.5% lower amid reports that the U.S. securities regulator had begun a probe against the lender and it's CEO Chanda Kochhar. Shares of ICICI Bank are listed on the New York Stock Exchange.

Kochhar had come under the scanner of regulators amid allegations of conflict of interest in approving loans to corporates. ICICI Bank last month said it will institute an independent enquiry into Kochhar's dealings.

--Nimesh Vora

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