Mumbai: Shares traded 0.3% higher in choppy trade on Tuesday as investors turned cautious after a recent rally, taking cues from rating agency Moody’s warning that it may cut its triple-A ratings on France, the United Kingdom and Austria.
Software exporters, which focus on the US and European markets for most of their business, and drugmaker Cipla were trading weaker, but investors turned bullish on State Bank of India and Tata Motors on strong earnings growth prospects.
By 10:10 am, the main 30-share BSE stock index was up 0.3% at 17,823.36 points, but was trading in a very narrow range after opening marginally lower. Nineteen of its components were trading higher.
“The market has run-up so much, it may have gone ahead of its fundamentals,” said Gajendra Nagpal, chief executive officer at Unicon Financial Intermediaries.
“I won’t be surprised if it corrects 3-4% but any downside is likely to be capped,” he said.
The index has posted weekly gains for six consecutive weeks, helping it rise more than 15% so far in 2012, fuelled mostly by foreign fund inflows of about $4 billion this year. It had declined nearly 25% in 2011.
Largest lender State Bank of India led the gains, rising 4% after reporting a better-than-expected 15% rise in quarterly profit on Monday, with investors ignoring a rise in non-performing assets.
Private sector rival ICICI Bank rose 1.5%, but HDFC Bank was down 0.8%.
Tata Motors was up 1.7% ahead of its results as investors bet on higher profits, driven by strong sales at its luxury Jaguar-Land Rover unit.
Analysts expect the company to report a net profit of Rs2,613 crore for the December quarter, according to Thomson Reuters I/B/E/S, up from Rs2,420 crore a year ago.
Utility vehicle maker Mahindra & Mahindra and Maruti Suzuki were up 1.4% and 1%, respectively.
Software exporters were trading lower on worries the global economic woes might impact technology spending by corporates. Shares in Tata Consultancy Services were down 0.3%, Infosys fell 0.5%, while Wipro was trading down 0.5%.
Rating agency Moody’s warned on Monday it may cut the triple-A ratings of France, the United Kingdom and Austria, and it downgraded six other European nations including Italy, Spain and Portugal, citing growing risks from Europe’s debt crisis.
Cipla Ltd was down more than 4 percent after the drugmaker reported a lower-than-expected 16% rise in its December-quarter net profit.
Asian shares were trading weaker, with the MSCI’s broadest index of Asia Pacific shares outside Japan shedding 0.7%, while Japan’s Nikkei eased 0.2%.
The 50-share NSE index was up 0.3% up at 5,407.30 points.
In the broader market, 842 gainers led 425 declines, with 173 million shares changing hands.
Stocks to watch
• Sasken Communication Technologies rose 13% to Rs121.70 after the company said its board would consider a share buyback.
• Reliance Power rose 1.9% to Rs109.40 after it posted a 42% jump in December-quarter net profit on higher power generation and doubling of other income.
• Punj Lloyd rose 2.4% to Rs61.15 after the civil engineering firm posted Rs703.4 million profit in the December quarter, compared with a loss of Rs621.3 million in the previous year.