Mumbai: Indian shares climbed 0.55% on Tuesday, led by State Bank of India, as some long-term investors saw value in the market after it shed almost 4% over three days.
But trading was choppy as tepid US regional manufacturing data soured sentiment across markets in Asia.
Reliance Industries fell for a second day after a court asked the billionaire Mukesh Ambani-controlled energy group to sell gas at half the government-approved price to his estranged brother’s firm.
Engineering conglomerate Larsen & Toubro and Reliance Infrastructure were among the major gainers as investors bet their order book would be boosted by government plans to repair the country’s ramshackle infrastructure.
“Focus on infrastructure in India is legendary, and tales of woe abound. Improvements are taking place, as any foreign business visitor will be aware, but the need for more is paramount,” Goldman Sachs economists Jim O’Neill and Tushar Poddar said in a report.
“Incremental demand for infrastructure will continue to increase due to economic growth and urbanisation.”
The 30-share BSE index ended up 82.39 points at 14,957.91, with 23 stocks gaining, after falling as much as 1.7% at one stage. The 50-share NSE index rose 0.75% to 4,517.80.
Government-run State Bank of India rose 4.4% to Rs1,714.10 after Goldman Sachs upgraded the stock to “buy” from “neutral,” citing a strong earnings outlook and inexpensive valuations.
A tax official told Reuters the country’s top lender had paid Rs10.68 billion in advance taxes in April-June, 61% more than a year earlier, indicating better earnings.
Almost $8 billion in investments from foreign funds, as optimism grew the economy was picking up, have lifted the benchmark 86% from a 2009 low in early March.
It also received a boost after the ruling Congress-led coalition was re-elected last month, raising hopes a stronger election mandate may encourage the government to accelerate investor-friendly economic and financial reforms.
But concerns have emerged about expensive valuations, with niggling worries about the global economy and an uncertain outlook for corporate earnings growth weighing on investor confidence.
Investors will be wary ahead of the annual budget in early July, when the government is expected to announce reform plans to boost sagging economic growth and tackle a yawning fiscal deficit, analysts said.
“The market has held up very well recently, and so we could see some consolidation over the next few sessions. But there could be a recovery ahead of the budget in anticipation of the reforms the government could come out with,” Hitesh Agrawal, head of research at Angel Stock Broking, said.
“The bulls are not likely to give up very easily.”
Larsen gained 1.3% to Rs1,526.55, while Reliance Infrastructure advanced 6.1% to Rs1,268.55.
Reliance Industries fell 1.8% to Rs2,141.60, after dropping 7.5% in the previous session.
Non-ferrous metals producer Sterlite Industries dropped 4.4 percent to 634.10 rupees as copper prices in Shanghai fell for a fourth day.
ICICI Bank fell as much as 2.6% after Goldman Sachs downgraded the stock, saying current valuations factor in potential upside from its operating fundamentals.
The private-sector lender, which was downgraded to “neutral” from “buy,” later pared losses to end flat at Rs733.35, after almost tripling in value from early March.
In the broader section, gainers led losers 1,654 to 1,017 on relatively heavy volume of 696.2 million shares.
Most other Asian markets were lower on Tuesday, with Japan’s Nikkei falling 2.9%, while MSCI’s measure of other Asian markets lost 1.2%.
US equities marked their worst slide in a month on Monday after the New York Fed’s Empire State general business conditions index showed the factory sector shrank at a much more severe rate in June than the previous month.