Indian shares soar to record high

MUMBAI, Oct 31 (Reuters): Indian shares surged nearly 2 per cent on Friday to record highs for the second consecutive day after Bank of Japan's surprise expansion of its massive stimulus programme raised hopes for additional foreign inflows, boosting blue-chips.

In a rare split decision, the BoJ's board voted 5-4 to accelerate purchases of Japanese government bonds so that its holdings increase at an annual pace of 80 trillion yen ($725 billion), up by 30 trillion yen.

BoJ's easing is being seen as an alternative to the US Federal Reserve's just concluded bond-buying programme, supporting the rally in emerging markets such as India, already underpinned by reforms and hopes of a rate cut.

"BOJ's easing would further the argument of central bankers other then Fed providing stimulus to support economies and assets," said U.R. Bhat, managing director at Dalton Capital, a unit of U.K.-based investment management firm Dalton Strategic Partnership LLP that manages nearly $2 billion in assets. "I agree there are strong expectations of a rate cut. But there is no tax on expectations. Is it?"

Foreign portfolio investors have bought shares worth $13.45 billion and $22.44 billion in debt in Asia's third-largest economy so far this year. India ended fuel price controls, raised gas prices, proposed opening up of the coal sector and relaxed rules for foreign investment in construction, earlier in October.

The 30-share BSE index rose as much as 2 per cent to an all-time high of 27,894.32, before ending up 1.9 per cent at 27,865.83. The broader NSE index gained as much as 1.98 per cent to mark a record high of 8,330.75, and finished 1.87 per cent higher at 8,322.20. Both indexes surpassed their previous record highs hit on Thursday.