Indian shares inched up on Tuesday, helped by some buying in banks, while the rupee posted a one-week low as the dollar rallied overseas and the central bank sold the rupee to help bring it closer to its trade-weighted rate. The top 30-share Mumbai Stock Exchange index added a marginal 0.15 percent to end at 6,544.77 points as gaining issues outpaced losers by 1,204 to 852. Traders said investors, however, remained cautious ahead of the federal budget on February 28 as they await details on new tax proposals and fresh economic reforms to speed up growth.
"The market has been listless and will continue to trade in a narrow range," said Ajit Surana, managing director at Dimensional Securities. "People are biding their time and until the budget, it is really going to remain sideways."
Before sliding 1.26 percent on Monday, Mumbai's main share index had jumped some 8 percent since January 24 as foreign funds bought more than $1 billion of Indian stocks, encouraged by strong quarterly earnings.
Traders said portfolio inflows from overseas had again ebbed slightly in recent sessions amid some profit-taking.
"Whatever big fund money that had to come in has already come in and they (the foreign funds) are sitting on the sidelines as well," Surana added.
Among the gainers were mortgage firm Housing Development Finance Corp, up 3 percent, and HDFC Bank, which gained 1.7 percent.
The rupee slid more than 0.4 percent to finish at 43.69/70 per dollar, its lowest close since February 1.
The rupee, which started the session weaker in the face of the dollar's rally, found itself under more pressure after state-run banks' bought dollars on behalf of the central bank, triggering a flurry of stop-loss covering.
Traders said the move may have been to help restore parity to the rupee, which was overvalued by nearly 5 percent in trade-weighted terms at the start of the session, as per J.P. Morgan Chase's real effective exchange rate index.
Federal bonds rose to one-month highs amid cheer over the end of the government's scheduled borrowing for this fiscal year and hopes softer oil prices would ease inflationary pressures.
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