ICICI Bank drives Indian shares to record high

Analysts and traders said ICICI, the country's most valuable bank which accounts for more than 10 percent of the benchmark index, was planning an initial public offer for its investment banking and broking unit, ICICI Securities.

The bank held a meeting for select group of investors on Monday, and traders said that was the source of the talk, which helped the stock recover form an early fall of 3.9 percent to end up 6.1 percent at a record close of Rs.1,363.90.

"There is a belief in some circles that if the subsidiaries are valued separately, the sum-of-the-parts business that is the listed entity ICICI Bank would have a far higher valuation than what the market currently reflects," said Arun Kejriwal, director at KRIS.

"It is with this intention that they had called the select investors' meet," he said.

A spokesman for ICICI Bank said it was exploring various opportunities for its subsidiaries and that an announcement would be made if there was any decision.

The benchmark BSE 30-share index ended 0.61 percent, or 125.76 points, up at 20,812.65, its highest ever close.

However, 18 components ended down.

The index hit a record high of 20,861.83 during trade as the ICICI talk helped it recover from early losses of 1.2 percent after it was caught in a sell-off in global markets after weak U.S. employment data heightened fears of a U.S. recession.

Sentiment has been underpinned by expectations that companies will report good December quarter earnings from later this week, as well as bullishness on India's biggest ever IPO.

"Due to the global weakness, we'll continue to see some volatility for sure, but I don't see any big correction happening as these events are there," said Dipak Acharya, a fund manager at BoB Mutual Fund.

Reliance Power Ltd, which is 50 percent owned by Reliance Energy Ltd, is looking to raise up to $3 billion in its initial public offer next week, which would be an Indian record.

Reliance Energy ended 2.9 percent up at a record close of Rs.2,584.15. Reliance Communications, which is also part of the Anil Dhirubhai Ambani Group, added 4 percent to Rs.790.05, its highest close in more than two months.

Software services stocks, which get more than half of their revenue from the U.S., were down on fears that a recession in the world's biggest economy would lead to a cut in companies' spending on information technology infrastructure.

Infosys Technologies, which reports quarterly results on Friday, fell 3.4 percent to its lowest close since Dec. 19, and sector leader Tata Consultancy Services lost 2.9 percent to its lowest close since late November.

In the broader market, 1,564 gainers beat 1,341 losers on volume of nearly 757 million shares.

The 50-share NSE index edged up 0.08 percent to 6,279.10. It had hit a record high of 6,300.05 on Friday.

Elsewhere, Karachi's 100-share index fell 0.67 percent to 14,163.40, while Colombo's All Share index fell 0.87 percent to 2,488.55, its lowest close since late August.

STOCKS THAT MOVED

* Sugar firms rose sharply - Balrampur Chini Mills Ltd was up 5 percent, Bajaj Hindusthan Ltd 16.6 percent, Shree Renuka Sugars Ltd 5.3 percent and Dhampur Sugar Mills Ltd rose 5 percent after raw sugar futures ended at a 10-month high in New York on Friday.

* Advanta India Ltd rose as much as 12.1 percent to a life high of Rs.1,740 after it said it had bought the business of Unicom Seeds Ltd. But the stock reversed gains later and ended 4 percent down at Rs.1,489.15.