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Stocks

Shares at 8-month high as post-Brexit relief rally continues

MUMBAI (NewsRise) - Indian shares rose to eight-month highs Monday, as global markets extended gains amid expectations major central banks will announce stimulus measures to cushion the impact of Britain leaving the European Union.

The nation's benchmark BSE Sensex advanced for a fifth consecutive session, rising 0.49% to 27,278.76 points, its highest level since October 26. The Sensex rose 2.8% last week. The broader NSE Nifty50 index advanced 0.51% to 8,370.70 points, its highest since August 20 last year.

Oil & Natural Gas Corp, Tata Motors and infrastructure stocks were among the biggest gainers on the Sensex Monday, while ITC and Dr. Reddy's Laboratories led losses.

"The worries related to Brexit have receded," said Kishor Ostwal, Managing Director at CNI Research. "Domestic macros - be it the monsoons, the overall pace of reforms and earnings growth are all pointing to a sustainable rally for Indian equities in the second half of the year."

Last week, global markets rebounded from a two-day selloff that wiped nearly $4 trillion off of world stocks after Britain's shock vote to leave the European Union.

Risk assets recovered on expectations major central banks, including Bank of England and Bank of Japan, will cut interest rates further and offer more stimulus measures. Markets have also pushed back expectations of an early Federal Reserve rate increase, further boosting regional assets.

The MSCI Asia Pacific index, excluding Japan, rose for the fifth session Monday, advancing almost half a percent. The index gained almost 4% last week in a four-session rally, recovering all losses chalked up in the aftermath of the U.K. vote.

Wall Street and European markets ended higher for a fourth day straight on Friday. U.S. markets will remain closed today for Independence Day, while Europe turned higher in early trade.

In Asia, China's Shanghai Composite and Hong Kong's Hang Seng rallied 1.9% and 1.3%, while Japan's Nikkei 225 and South Korea's KOSPI advanced 0.6% and 0.45%.

On the Sensex, 19 of the 30 constituents ended higher Monday, while overall advancing issues outnumbered declining ones 1,724 to 1,016 and 145 closed unchanged.

Tata Motors rose 2.4% to 468.90 rupees. Late Friday, the automaker said total passenger and commercial vehicle sales rose 8% to 44,276 vehicles in June. Strong U.S. sales at the company's British unit Jaguar Land Rover also boosted the stock. The luxury carmaker sold 8,448 units in the United States in June, 44% higher than the year ago.

ONGC rose 3.4% to a six-month high of 232.05 rupees, extending last week's 7.5% advance. The stock was supported by a 0.25-rupee increase in kerosene prices, the first in five years. Analysts said the move was significant because it could signal the government's intent to deregulate kerosene prices, which would reduce the subsidy burden on oil upstream companies.

Engineering conglomerate Larsen & Toubro rose 1.59% to 1,565.20 rupees, its highest level this year. Its subsidiary L&T Infotech's initial public offering will open for subscription next Monday in a price band of 705-710 rupees per share. LT is looking to divest 10% of its stake through the offering.

Power equipment maker Bharat Heavy Electricals and port operator Adani Ports and Special Economic Zone were among the other major gainers on Monday, advancing 4.66% to 138.05 rupees and 4.23% to 213.20 rupees. Value buying, hopes of turnaround in investment cycle and buoyant market sentiment have lifted the stocks in recent weeks. Still, the stocks are down about 18% each this year.

Bajaj Auto declined 0.68% to 2,650.85 rupees. The two-wheeler maker reported earlier today that June sales fell 4% year-on-year to 316,959 vehicles. Rival Hero MotoCorp ended 0.05% lower at 3,175 rupees, recovering from an intraday decline of over one percent. Late Friday, Hero reported a tepid 1.3% increase in June sales to 549,533 units.

Analysts expect sales to pick up in the second half of the year if the forecast of normal monsoon rains pans out. Hero and Bajaj are up 17% and 5% this year.

Cigarette maker ITC and drugmaker Dr. Reddy's Laboratories were hurt by profit taking Monday, sliding 2.97% to 244.85 rupees and 1.21% to 3,435.05 rupees. The stocks had rallied 7% and 10.5% last week.

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