Yesterday's Trading: Indian equities heat up market
Stocks with an Indian flavour were as hot as a plate of vindaloo following the Congressled UPA alliance's unexpected and decisive victory in the country's elections.
Geoff Foster: Reporting on yesterday's market action
After the Indian stock market soared a record 17% and analysts forecast the victory would lead to not only a stable government but pension, insurance and banking reforms, buyers chased three spicy Footsie favourites significantly higher.
Cairn Energy, which floated off its Indian wing in January 2007 but still holds a 69.9pc stake in the operation, closed 118p higher at 2454p. Cairn's prospect in the Rajasthan region is one of the country's largest-ever finds.
First production from the Mangala field should come on stream in the third quarter of this year. Mangala output is planned to reach 125,000 barrels per day in the first half of 2010.
Bulls also expect the tenor of chairman Norman Murray's AGM address today to be bullish and lead to earnings upgrades. Cairn is now Britain's biggest player in Greenland, prospecting alongside the likes of Exxon and Chevron. Murray should wax lyrical about its involvement in that area too.
Vedanta Resources, India's biggest copper and zinc producer, saw heavy demand and closed 89p better at 1405p. Standard Chartered, which has many branches in India, rose 100p to 1275p.
Meanwhile, India's largest residential builder Hirco jumped 16¾p to 118p and JP Morgan Indian Investment Trust soared 43¼p to 329¼p.
Better-than-expected first-quarter earnings from American home improvement retailer Lowe's pleased Wall Street which advanced 164 points in the early stages. That breathed life into a flagging Footsie which retrieved a 40-point deficit to close 98.34 points higher at the day's best of 4,446.45.
The FTSE 250 added 103.76 points to 7,576.63.
Obviously not displeased to hear that chairman Sir Victor Blank has fallen on his sword following the HBOS debacle, fund managers bought Lloyds Banking Group, 8.8p better at 98p.
HSBC jumped 23½p to 555½p after Citigroup lifted its target price to 650p from 500p, believing the bank can avoid a major restructuring of its financing position. Buying in anticipation of pleasing annual results today helped inter-dealer broking giant ICAP rise 17¼p to 399½p. As shares of South Africa's Vodacom made an impressive debut on the Johannesburg bourse, joint owner and mobile phone giant Vodafone buzzed 4¼ p higher to 127.45p ahead of today's preliminary results.
Financial information group Thomson Reuters advanced 64p to 1743p after Morgan Stanley upgraded to overweight and raised its target price 37pc to £20.
The broker is taking a more upbeat view on its key markets division where it now expects a shallow and less prolonged downturn. The strategic position of the markets arm has strengthened and should be further improved by the late 2009 launch of a new common platform.
Shares in the coal-fired power station Drax was sold down to 475p on an Evolution reduce recommendation, but rallied late to finish 2¾p better at 491p. Evo's analyst Lakis Athanasiou believes that S&P's decision to downgrade its debt casts doubts over how much debt it can re-finance next year. Refinancing of the debt due for repayment in 2010 is required to pay a dividend.
Recovery hopes helped motor components group GKN accelerate 13¼ p. African Copper bounced back with a speculative gain of 4.1p after mining group Zambia Copper Investments said it will provide AC, which is developing its first copper mine in Botswana, with an additional £16.6m of funds.
It follows a revised financing offer to AC by ZCI rival Natasa Mining, which on Friday called for the immediate repayment of the 150m Botswana pula (£13.7m) bonds issued by the AC unit, Messina.
Following a bullish operational update Churchill Mining jumped 4½p. The company has doubled its resource to 3.18bn tonnes of thermal coal, making it one of the largest thermal coal deposits in Indonesia.
Fortune Oil gushed 0.61p to 6.93p after the Chinese oil and gas distribution company reported increased demand for jet fuel in China, as well as an increased amount of crude oil imported through Fortune Oil's facility.
A Canaccord recommendation and target price lifted Centamin Egypt 2¾p. The broker believes the group's first gold production at Sukari is in sight.
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