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India shares jump most in 17 months as equity markets advance on US jobs data

ITC, Infosys among key gainers

MUMBAI (NewsRise) -- Indian shares posted their biggest jump in about 17 months on Monday, boosted by gains in heavyweight ITC and upbeat U.S. jobs data.

The BSE Sensex rose 1.8% to 33,917.94, its biggest gain since Oct. 18, 2016. The Nifty 50 Index advanced 1.9%, the most since May 25, 2016, to 10,421.40. ITC was the biggest contributor to the advance, adding 4.1% as cigarette makers rose after the county's Goods and Services Tax Council refrained from changing levies on cigarettes at its meeting over the weekend. Godfrey Phillips India added 3.5%.

Infosys paced advance among software companies, closing 1.9% higher. Kotak Mahindra Bank led private lenders higher, gaining 1.1%.

State-owned banks continued to underperform amid persisting concerns over their asset quality. Andhra Bank tumbled 6.9% after India's Enforcement Directorate filed charges against one of its former directors in relation to a fraud involving a pharmaceutical company. It was among the worst performers on the Nifty index for state-run banks, which declined 0.5%. Six of the 10 index constituents fell.

Other Asian markets also posted gains following Friday's more-than-400-point rally on the Dow Jones Industrial Average after the U.S. economy added more jobs in February than economists had expected. In more good news for equity investors, the annual pace of growth in average hourly wages was lower than in January, reinforcing bets that the U.S. Federal Reserve will likely raise rates at a measured pace this year.

"It is the best of both worlds for equity markets," said Sageraj Bariya, vice president of institutional sales at East India Securities. "The U.S. economy is looking strong and wage growth is moderating. The wage numbers will mitigate concerns over the Fed's pace of interest rate hikes."

Meanwhile, data to be released after market hours on Monday is expected to show that India's retail inflation likely eased to a four-month low of 4.8% in February, economists polled by Reuters predicted. India's January industrial production data is also due for release.

"With the latest GDP statistics and high frequency indicators continuing to suggest that growth is recovering, the debate remains on the outlook for macro stability risks," Morgan Stanley said in a note. "Against this backdrop, there will be some alleviating of near-term concerns given the likely moderation in inflation prints for Feb-18."

United Spirits led liquor makers higher, adding 5.5%. According to media reports, the GST Council had deferred its decision regarding a tax levy on Extra Neutral Alcohol, a key ingredient in making alcoholic beverages.

Indian shrimp distributors dropped after a Bloomberg report that the U.S. Department of Commerce had suggested a hike in anti-dumping duty on Indian shrimp. Waterbase dropped 5.6%.

Bharti Infratel climbed 0.8% after Morgan Stanley said in a note that the telecom tower infrastructure provider's share valuations "are cheap and the stock may be getting close to the buy zone."

Coal India dropped 2.3% to 297.80 rupees. The miner said over the weekend that it had approved payment of 16.50 rupees per share interim dividend for the financial year ending 31st March.

Goldman Sachs, which maintained its `sell' rating with a target price of 270 rupees on the stock, said that while it remains constructive on volume growth, margins will likely remain under pressure.

--Nimesh Vora and Vidyut Deshpande

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