: Indian shares ended at highest level in two-weeks after the labour minister said that the Employees' Provident Fund Orgatinsation would invest additional funds into equities next year. Larsen & Toubro and Dr Reddy's gained the most among the index components.
"EPFO entering the stock markets has boosted the investors' sentiments which can be seen in today's trade," said K K Mital, head-portfolio management services at Venus Capital Management Inc.
Labour Minister Bandaru Dattatreya today said that the retirement fund could invest more into local equities in the next fiscal year beginning April, by raising current limit set at 5% of total investable assets.
The EPFO has debuted in the stock markets today, set to bring in Rs 60 billion worth funds.
Central Provident fund Commissioner, K.K. Jalan said that to begin with, EPFO will invest in two exchange traded funds, one built around the Nifty index of the National Stock Exchange and another around BSE's Sensex. Going forward, it may diversify its basket of ETFs.
According to a decision by the central board of EPFO, the retirement fund manager will invest up to 5% of its incremental corpus in ETFs in the current financial year. In other words, between 6 August and 31 March 2016, EPFO will pump in between Rs 50 billion and Rs 60 billion in the stock market.
The EPFO plans to commence investing in local shares with an initial corpus of Rs 50 billion on Aug 6 and has tied up with SBI Mutual Fund to manage the process.
However, sharp rise in the key indices were capped after strong services data from United States and comments from the Federal official triggered fear that the Federal Reserve may hike rates in September.
Another data by Markit showed, non-manufacturing PMI came at 55.7 in July compared to 55.2 in June.
United States services PMI came at 60.3, its highest level since Aug 2005 in July, compared to 56 a month earlier, data release by the Institute for Supply Management (ISM) showed.
On Tuesday, Dennis Lockhart, Federal Reserve President of Atlanta expressed his support for an interest rate hike in September.
Lockhart, a voting member of Federal Open Market Committee this year, said to Wall Street Journal that it would take 'significant deterioration' in the United States economy for him not to support a September rate hike.
In its latest policy review last month, the central bank reiterated its resolve to hike rates later this year as the economy was poised for expansion and labour market was expected to improve further. A pick-up in US economy, the world's biggest, augurs well for emerging market especially for exporting companies.
The central bank said it was seeing "solid" job gains and maintained its view that economic activity was expanding "moderately", with the risks to the outlook "nearly balanced".
India's benchmark index, the S&P BSE Sensex rose 0.42% to 28,343.16 on the Mumbai stock exchange. The measure opened at 28,291.88 compared to previous close of 28,223.08.
The 50-share Nifty gained 0.044% to 8,605.15 on the National Stock exchange. The measure opened at 8,585.80 compared to previous close of 8,567.95.
Overseas investors net bought Rs 4.48 billion worth local shares Wednesday, provisional data from the stock exchanges showed.
The following stocks/sectors recorded significant movement on the stock exchanges today:
Drugmakers: Dr Reddy's Laboratories Ltd, India's second biggest drugmaker,and others spurted after global brokerage house CLSA said that the shift to complex drug will drive to re-rating.
Shares of Dr Reddy's climbed 1.8% to Rs 4,270.10 while shares of Lupin spurted 1.4% to Rs 1,703.15 and shares of Aurobindo Pharma advanced 3.14% to Rs 787.70 on the Mumbai stock exchange.
Arvind Ltd: The owner of brands like 'Flying Machine' and 'Arrow', Thursday said fiscal first quarter consolidated profit fell 36% on higher finance costs and one-time cost.
Bajaj Electricals Ltd: A maker of fans and other household appliances, Thursday said fiscal first quarter net profit rose more than two-fold on robust sales and higher other income. Shares of the company jumped.
Dr Reddy's Laboratories Ltd: India's second largest drugmaker, surged to a fresh record high Thursday after the company unveiled its expansion plans and has inked a strategic collaboration with Amgen. Shares advanced.
Mahanagar Telephone Nigam Ltd: A state owned mobile service provider, spurted on talk that government may compensate it for surrendering CDMA spectrum.
Motherson Sumi Systems Ltd: India's biggest maker of automotive rear view mirrors, Thursday said fiscal first quarter consolidated profit rose 62% on higher sales. Shares of the company fell.
Nestle Ltd: The local unit of the Switzerland's biggest food company, slipped after the food safety regulatory denied giving Maggi a clean chit despite an all clear from testing labs in Goa and Mysore.
Rolta India Ltd: A software solutions company, surged after it won smart city and 3D mapping with city modelling projects in the Middle East for $15 million.
Salzer Electronics Ltd: A unit of Salzer Group, declined after Merrill Lynch Capital Markets Espana SA SV and Larsen & Toubro Ltd sold stake in the company.
Siemens Ltd: A local unit of the world's biggest power equipment maker, jumped to record high Thursday after fiscal third quarter net profit surged over ten folds on higher sales and other income. Shares rose.
Tata Global Beverages Ltd: The biggest tea producer in India, Thursday said fiscal first quarter consolidated profit slumped 15.3% on exceptional cost and lower other income.
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