Indian shares rise

Indian shares rose 0.4 percent in choppy new year trading on Monday as investors cheered a government decision to allow foreigners to directly buy stocks, but the market remained unconvinced about risk appetite amid worries about the global economy. Coal India and Tata Motors climbed on positive newsflow, but Bajaj Auto tumbled 7.3 percent on worries over its sales growth outlook, while iron ore exporters slid after a sharp increase in export duty.
"Most issues still relate to the fact that investors are not returning to the market for long-term investment," said Deven Choksey, chief executive at K R Choksey Shares & Securities. "I don't see the market heading down much further, but till results season starts, there is likely to be uncertainty." The main 30-share BSE index closed up 0.41 percent at 15,517.92 points. It had fallen as much as 0.6 percent earlier. Nineteen of its components closed higher.
The Sensex had been among the worst performing markets in the world in 2011, falling 24.6 percent, as high interest rates and slowing economic growth dented investor confidence. Foreign funds were net sellers of more than $450 million last year, compared with inflows of over $29 billion in 2010. With many world markets closed on Monday, activity was relatively light. In the broader market, there were 749 gainers against 666 losers on light volume of 422 million shares.
The 50-share NSE index ended up 0.3 percent at 4,636.75. The government said on Sunday individual foreign investors would be allowed to directly access the stock market from January 15. It was the latest step to liberalise Asia's third-largest economy after a year of big losses in the stock market. "It's a good decision for the longer term, but won't have any impact for the moment because no foreign investor wants to put in money right now," said Ambareesh Baliga, chief operating officer at Way2Wealth Securities.
On Monday, the world's largest coal miner Coal India said it expected higher revenue after a change in its pricing method and hoped this would offset the impact of wage increases in the near term. The stock rose 3.8 percent to 312.15 rupees. Shares in automakers Tata Motors and Maruti Suzuki rose 2.9 percent and 2.2 percent, respectively, after their strong showing in December sales.
Tata Motors said sales for the month rose 22 percent from a year earlier, while Maruti sales fell just 7 percent despite crippling strikes at its plants and falling demand. However, two- and three-wheeler maker Bajaj Auto fell 7.3 percent, after it reported a lower-than-expected 10 percent rise in December sales, raising worries about its sales growth outlook for the current fiscal year.
Shares in state-run iron ore miner NMDC and largest ore exporter Sesa Goa, a unit of Vedanta Resources, fell more than 3 percent each after India raised export duty on iron ore to 30 percent from 20 percent previously with effect from December 30. The market was also supported by comments from the central bank's governor and positive manufacturing data.
The Reserve Bank of India is likely to begin easing monetary policy to address concerns about economic growth, Governor Duvvuri Subbarao said in a BBC interview, reiterating comments made by the central bank on December 16, when it kept rates unchanged. Manufacturing activity surged to a six-month high in December thanks to a spike in factory output and new orders from domestic and international firms, a survey of purchasing managers showed on Monday.
JSW Steel rose 5.9 percent to 536.95 rupees on hopes of higher local availability of iron ore after India raised export duty on the steel-making raw material to 30 percent from 20 percent. The company had been forced to cut capacity at its plant in southern Karnataka state after an interim ban on iron ore mining in Bellary district by the top court. *Steel Strips Wheels rose 2.4 percent to 194.90 rupees after the auto parts makers said wheel rim exports rose 18 percent in December, while truck rim sales jumped 352 percent.