Indian shares snapped a five-day losing streak and rose 0.4 percent on Wednesday, tracking a surge in overseas markets on strong data pointing to sustained global economic recovery and easing concerns about Egypt. The gains were also supported by bargain hunting, a day after the main index had slid to its lowest close in five months, extending its losses to nearly 6 percent in five sessions.
Bharti Airtel Ltd rallied as much as 3.6 percent, erasing losses of as much as 3.3 percent in the opening deals, on the mobile phone carrier's improved earnings outlook. The stock ended up 2.8 percent at 323.25 rupees. Improved prospects in Africa and the launch of 3G services in India have brightened the outlook for Bharti after currency losses led to a bigger-than-expected 41 percent fall in the December-quarter net profit.
The benchmark 30-share BSE index ended up 0.38 percent, or 68.40 points, at 18,090.62, after having risen as much as 1.6 percent during the day. But 17 of the index components closed in the negative zone. The Nifty or the NSE-50 index ended 0.27 percent higher at 5,432 points. The market gave up some of its gains after reports that Indian police had arrested a former telecoms minister over an alleged scam linked to awarding mobile licences, in a move that could weaken the coalition government.
"The recovery today was primarily on account of strong global markets, but the fears of inflation and rising interest rates continue to put pressure on the markets," said K.K. Mital, head of portfolio management services at Globe Capital. "The overall mood is still very fragile and investors should be cautious in entering the market in the near-term." The main index is down about 12 percent so far this year, after having risen 17 percent last year, as worries about surging inflation in Asia's third-largest economy led to withdrawals by overseas portfolio investors.
Foreign funds were net sellers of $1.4 billion worth of shares in January, after they invested a record $29.3 billion last year. Concerns about the political crisis in Egypt eased in the markets after President Hosni Mubarak said he would step down at the end of his term in September, even though protestors continue to demand an immediate end to his 30-year rule. However, worries remained that rising domestic inflation could force more monetary tightening.
India's central bank last week raised interest rates for the seventh time since March to curb stubbornly high inflation. Shares in Hero Honda fell as much as 6.7 percent to 1,500.10 rupees, their lowest level in a year, after the motorcycle maker posted a 20 percent fall in quarterly profit on higher input costs and lower component supplies.
The company said its margins would remain under pressure in the short term. Leading outsourcers were among the top gainers after being battered in the past few sessions. Tata Consultancy Services rose 2.5 percent to 1,178.90 rupees and Wipro climbed 2 percent to 437.65 rupees. Energy major and index heavyweight Reliance Industries Ltd rose 2.9 percent to 921.40 rupees, driven in part by value buying and hopes rising crude prices would improve refining margins. In the broader market, gainers were almost equal to number of losers on a volume of 275 million shares.
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