Indian shares pared early gains of almost 1.5 percent to end up just 0.14 percent on Monday - enough to end a three-day run of falls - as investors freed up funds to subscribe to the country's biggest-ever IPO.
Property developer DLF Ltd said the institutional portion of its $2.4 billion initial public offering had been fully subscribed within an hour of its opening on Monday. Subscription runs until Thursday. The benchmark BSE 30-share index gained 19.60 points to 14,083.41, but 18 of its components fell. The index, which fell 3.5 percent last week, was up as much as 1.46 percent during the day.
"We could see a 3-4 percent further correction," said Rajen Shah, chief investment officer at Angel Broking. "Some sections of the market feel that the markets are quite stretched. So some profit-booking is happening at higher levels.
Gajendra Nagpal, a director at Unicorn Investments, said there was less participation by institutional investors in the market than normal. The index hit a high of 14,683.36 last Monday - just 40 points below its all-time high set in February, but then lost momentum after a sell-off started in global equity markets on concerns of rising interest rates.
"For another three to five days, the Sensex may bounce back and correct the recent fall from 14,683 to 14,010," HDFC Securities technical analyst Adwait Sapre said in a note. "The strength of the bounce will determine as to how much will the Sensex fall once the bounce is over." For a technical analysis of the main indices by Reuters, see www.reutersindia.net. Shares in second-largest software exporter Infosys Technologies gained 1.5 percent to 1,980.10 rupees.
"We believe that present uncertainty (primarily around currency) and underperformance offers a good entry point from a one-year point of view," Citigroup analysts said in a note released on Monday. They raised their price target for the stock to 2,440 rupees.
Shares in Reliance Industries ended up 0.5 percent at 1,668.20 rupees. HSBC Securities, in a note released on Friday, said it expected the company's earnings to more than double by 2010/11 as its new buiness ventures started to contribute.
In the broader market, losers beat gainers 1,409 to 1,161 on a relatively low volume of 196.8 million shares. The broader S&P CNX Nifty ended little changed at 4,145.60. Elsewhere in the region, Karachi's 100-share index ended little changed at 13,268.28 after opening at a record high of 13,382.66 after the government budget was released on Saturday. Colombo's All-Share index rose 0.06 percent to 2,557.11.
Glenmark Pharmaceuticals Ltd shares rose as much as 7.3 percent after the drug maker's board approved spliting each share into two. The shares closed 1.3 percent up at 684.35 rupees.
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