Indian shares pulled back from an early slide and eked out a 0.1 percent gain on Monday, after a recovery in their European peers helped soothe nerves. Beaten down telecoms Bharti Airtel and Reliance Communications led the rise. The government forecast the economy would grow 7.2 percent in the current fiscal year that ends in March, picking up from a six-year low in the previous year and reinforcing market expectations of strong industrial growth.
The rebound could prepare the ground for a roll-back in stimulus incentives when the federal budget is unveiled on February 26 and hasten an increase in interest rates to tame inflation pressures. For the time being, however, investors will be watching the debt problems in Europe, traders said.
"The market will continue to be volatile in near term, until the global picture has some clarity," said Vaibhav Sanghavi, director of Ambit Capital. "The worries in the euro zone will weigh." The 30-share BSE index ended up 0.13 percent, or 19.96 points, at 15,935.61, after falling 1.7 percent at one stage. Sixteen of its components gained.
Bharti, India's leading mobile operator, rose 2.7 percent to 308.30 rupees and rival Reliance Communications climbed 2.2 percent to 168.70 rupees. The stocks were the only ones to fall in 2009 amongst the constituents of the main index. Banks gained on hopes for good long-term outlook in a growing economy.
Top lender State Bank of India rose 1.1 percent and rival ICICI Bank firmed 0.4 percent. Non-ferrous metals producer Sterlite Industries gained 0.4 percent to 752 rupees as copper prices scored their biggest one-day gain since November.
Top power producer NTPC closed down 1.3 percent at 202.40 rupees after a muted response to its follow-on public offer that was just covered on the final day. In the broader market, losers outpaced gainers in a ratio of 1.1:1 on volume of 334 million shares, down from last week's daily average of 394 million shares. The 50-share NSE index rose 0.07 percent to 4,760.40.