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Shares jump as Fed rate hike bets recede; financials lead

MUMBAI (NewsRise) -- Indian shares rose to over a week's high Monday, outperforming other regional indices, as investors scooped up finance sector heavyweights amid cooling expectations of an early Federal Reserve rate increase.

The benchmark BSE Sensex rose 1.82% to 25,688.86 points, clocking its largest single day advance in almost a month and touching its highest level since April 27. The broader NSE Nifty50 index advanced 1.71% to 7,866.05 points.

Housing Development Finance Corp and ICICI Bank led gains among financials, while all other sectoral indexes also closed higher. Dr. Reddy's Laboratories and Hindustan Unilever were among the handful of stocks to decline.

Data released Friday showed the U.S. economy added 160,000 jobs in April, the lowest in seven months, further weakening chances of a Federal Reserve rate increase in June.

U.S stocks rose 0.4% on Friday after the numbers were released and stock futures pointed to a higher opening on Wall Street. European stocks were up 1.34% Monday.

Asian markets were mixed as rolled back expectations of a Fed rate increase were countered by weaker-than-expected trade data from China. China's imports slumped 10.9% year-on-year in April, while exports slipped 1.8%.

China's Shanghai Composite slumped 2.76% and South Korea's KOSPI declined 0.44%. Hong Kong's Hang Seng and Japan's Nikkei 225 rose 0.23% and 0.68%.

Twenty-six of the 30 Sensex constituents ended higher, while overall advancing issues outnumbered declining ones 1,673 to 972 and 162 closed unchanged.

"We believe that the banking sector is likely to underperform for the next two quarters as well. Post October, we may see recovery and incremental growth to start trickling in," said Ashok Ajmera, Chief Executive Officer at Ajcon Global. "Markets have settled into a near term consolidation phase after March's rally."

The Sensex rose over 10% in March on positive global cues and as the government stuck to a path of fiscal discipline.

HDFC remained firm in its recent uptrend, advancing 3.12% to 1,204 rupees Monday. The housing finance provider has been the best performing stock on the Sensex after it posted upbeat quarterly earnings last week. Until recently, asset quality worries had weighed on the stock after the company in April announced it would make a one-time provision of 4.5 billion rupees.

While the mortgage provider posted earnings that were only marginally ahead of expectations, the results allayed fears of a significant slowdown in its core growth earnings trajectory.

ICICI Bank rose 3.28% to 225.30 rupees. The private lender had fallen 9% till last week after posting disappointing earnings on April 29 on account of increased provisioning.

State Bank of India, which had fallen over 4% in the same period, rose 2.3% to 188.65 rupees. Private lenders Axis Bank and HDFC Bank ended 3.41% higher at 477.25 rupees and 1.89% higher at 1,141.85 rupees.

ITC advanced 2.38% to 324.75 rupees Monday. The cigarette maker informed exchanges on Sunday that its cigarette factories are commencing production "progressively." Last week, ITC had said it will shut down its plants from May 4 in order to comply with a new specified pictorial warnings rule.

Motorcycle sales in India rose 16% year-on-year last month with total sales touching 1.02 million units, according to data released by the Society of Indian Automobile Manufacturers (SIAM).

Hero MotoCorp, the world's largest two-wheeler maker, and its peer Bajaj Auto gained 2.19% to 2,948.10 rupees and 3.78% to 2,527.95 rupees

Domestic passenger car sales rose a more modest 1.9% in April. Shares of Maruti Suzuki India, the country's largest passenger car maker, rose 0.96% to 3,856.20 rupees.

Tata Motors ended 1.17% higher at 403.35 rupees after global sales from its British unit Jaguar Land Rover rose 11% in April.

Software services providers Infosys and Tata Consultancy Services rose 1.5% to 1,199.15 rupees and 1.75% to 2,515.35 rupees. The BSE Information Technology index ended 1.29% higher.

Index heavyweights Reliance Industries and Larsen & Toubro rose 1.42% to 982.95 rupees and 2.72% to 1,294.35 rupees.

Hindustan Unilever fell 0.8% to 846.10 rupees. The consumer major said its January-March net profit stood at 10.90 billion rupees, in line with market expectations.

Drugmaker Dr Reddy's fell 0.91% to 2,842 rupees ahead of its earnings later this week.

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