Indian shares rose 0.4 percent on Thursday, with engineering and construction conglomerate Larsen & Toubro (L&T) leading the gains after strong earnings. Expectations for another rate increase in June have gathered momentum after state-run refiners raised prices of petrol by 8.6 percent on the weekend, a move that will put upward pressure on inflation.
Data on Thursday showed the fuel price index rose 12.11 percent in the year to May 7. The 30-share BSE index ended up 73.61 points at 18,159.81, with 13 of its components rising and one unchanged. It had opened up 0.5 percent and then slipped into negative territory. Fourteen of its components advanced. Volume in the broader market was 76.2 million shares.
The broader 50-share NSE index provisionally closed 0.32 percent higher at 5,437.75 points. "The market is trying to find a base. There is no major selling coming in, there is no major buying either," said Neeraj Dewan director with Quantum Securities. Top-listed realtor DLF and utility Tata Power were among the big losers, dropping 2 percent and 2.5 percent respectively.
Engineering and construction conglomerate Larsen & Toubro was down 1.3 percent ahead of its results. Consensus estimates in a Reuters poll showed analysts expect a 7.6 percent rise in January-March profit. Its full-year orders and revenue outlook will be eyed. "If we can get one good result from a large cap firm, that could support the market," Dewan said.
On Tuesday, State Bank of India, the country's top lender, posted an unexpected slump in quarterly profit on higher provisioning and operating costs. The stock was down 0.4 percent, taking losses since the result to over 10 percent. Beaten down auto stocks pulled back and the sector index sector index was up 0.2 percent. Top truck maker Tata Motors rose 0.3 percent and utility vehicles maker Mahindra and Mahindra gained more than 1 percent.
The central bank had raised rates by a hefty 50 basis points earlier this month and warned inflation would remain around March levels in the first half of the fiscal year. Headline inflation in April was at an annual 8.66 percent, data on Monday showed, and the prospect of rising energy costs is likely to keep pressure on the central bank to raise rates when it reviews policy on June 16.