Indian shares climbed 1.6 percent on Tuesday, snapping a four-session slide, with banks and automakers leading the rise on expectations for an interest rate cut next month. Fund managers are betting the economy would pick up pace in the coming fiscal year that start in April after slowing sharply in the current year, traders said.
"Investors who felt left out in the rally since the beginning of the year are buying since the markets have fallen in the past few sessions," said Alex Mathews, who heads research at Geojit BNP Paribas Financial Services. The main 30-share BSE index closed up 1.64 percent, or 285.37 points, at 17,731.12 with all but six of its components rising. The benchmark, which fell 5.3 percent over the previous four sessions, is up 14.7 percent in 2012 on foreign fund buying of about $7.1 billion worth of shares.
A sharp slowdown in infrastructure sector output growth to 0.5 percent in January from an upwardly revised annual growth of 4.6 percent in the previous month, should pile pressure on the central bank to ease its tight policy, traders said. The sector accounts for 37.9 percent of India's industrial output. Data due on Wednesday is expected to show the economy likely grew at its slowest pace in more than two years during the final months of 2011, a Reuters poll showed.
State Bank of India, the country's biggest lender, rose 5.1 percent, ICICI Bank gained 2.6 percent and HDFC Bank added 2.9 percent. Automakers, whose sales get a boost from cheaper credit, rallied. Tata Motors, whose products include trucks, buses, luxury brands Jaguar Land Rover and the Nano - the world's cheapest car - firmed 5.15 percent while carmaker Maruti Suzuki rose 1 percent.
Energy conglomerate Reliance Industries, which has the heaviest weight on the benchmark index, rose 1.93 percent. Oil and Natural Gas Corp advanced 0.84 percent and GAIL India added 0.7 percent after a media report said the two state-run companies plan to offer $2 billion to acquire Africa-focused gas explorer Cove Energy.
Top software services exporter Tata Consultancy Services and No 2 Infosys shed 2.04 percent and 0.38 percent respectively. India's showpiece $76-billion software services industry gets most of its revenue from the United States and Europe. The 50-share NSE index rose 1.79 percent to 5,375.50. In the broader market, there were about 6 gainers for every loser on a volume of 863 million shares.