Indian shares reversed a four-day slide and jumped more than two percent on Wednesday as investors spotted bargains among both technology and old economy companies, while the rupee inched higher to a fresh 12-week closing high.
The 30-share Mumbai index surged by 2.4 percent to 5,756.76 points, after falling 6.2 percent in the previous four sessions. The index is still down about eight percent from its historic peak scaled early last month.
Investors expect even more volatility as Indians go to the polls in the next three months, as expected, and the government sells more stakes in state-run companies.
"The market lacks conviction and in the near-term it will languish," said Ajit Surana, managing director of Dimensional Securities. "The uncertainty over elections and the huge public offerings are the two issues bothering investors."
But after reporting strong January sales, vehicle manufacturers were among the big gainers on Wednesday.
Hero Honda Motors Ltd, the nation's No 1 motorcycle maker, rallied six percent to 461.25 rupees and Maruti Udyog Ltd, the biggest car maker, jumped more than nine percent to 444.55 rupees.
Tata Iron and Steel Co, India's No 2 steel maker, leapt eight percent to 416.10 rupees after it told Reuters, just before Tuesday's close, it expected long-term contracts for the year to March 2005 to be renewed at a near 20 percent premium.
Cement makers were driven higher on expectations of increased prices in Mumbai, one of India's biggest construction markets. Associated Cement Companies Ltd, the industry leader, gained more than five percent to 255.95 rupees.
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