India's benchmark index edged higher on Wednesday as power equipment makers such as Larsen & Toubro gained on hopes the government would consider imposing import duties for foreign makers. Gains in Asian indexes contributed to a more optimistic mood as investors hope the Federal Reserve will announce monetary stimulus later in the day, possibly in the form of additional US bond purchases.
Meaningful US action could boost emerging market assets such as in India, offsetting some of the concerns about euro zone debt woes. After strong gains in June, Indian stocks were hit hard on Monday after the central bank kept interest rates on hold, putting the focus on the government to step in with measures to address concerns about India's fiscal and economic outlooks.
"Market is in a wait and watch mode. Nobody is in a mood to give any commitment. Slowdown is here to stay until and unless liquidity wave comes from US and Europe," said Jagannadham Thunuguntla, head of Research at SMC Investments. India's main 30-share BSE index rose 0.22 percent to 16,896.63 points, to mark its second consecutive session of gains.
The broader 50-share NSE index provisionally rose 0.33 percent to 5,120.55 points. Gains were led by power equipment makers as the power minister is expected to submit a new proposal for a potential import tax on foreign imports to a cabinet of ministers, according to two government sources.
Larsen & Toubro gained 0.9 percent, while BHEL rose 1.6 percent. Kingfisher Airlines surged 6.2 percent, while Jet Airways surged 5 percent. Spicejet rose 3.8 percent. Shares in Educomp Solutions Ltd rose 11.2 percent after the company said it has raised $155 million via external commercial borrowings, of which it plans to pay off foreign currency convertible bonds (FCCBs) worth $78.5 million.
Indian cement maker shares such as Ambuja Cements and ACC recovered strongly after initially dropping on media reports that the Competition Commission of India would soon impose fines over alleged price collusion in the industry. Though the CCI had not yet issued a ruling, traders said penalties were unlikely to be so high as to significantly impact cash flows, while they expect the process to lengthen further as companies impacted are expected to appeal. Ambuja Cements shares rose 1.4 percent after earlier falling as much as 4.6 percent. ACC shares rose 3.5 percent.
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