Mumbai: Indian shares pulled back slightly on Thursday from a steep slide in the previous session, with state energy explorer Oil and Natural Gas Corp and telecoms shares among the big gainers.
Investors were, however, circumspect with Asian peers still under pressure on fears of more regulations and lingering worries about the euro zone debt problems.
Mobile firms Bharti Airtel, Reliance Communications and Idea Cellular climbed as much as 6% as investors breathed a sigh of relief that a costly auction for 3G mobile spectrum had finally ended.
By 11:23am, the 30-share BSE index was up 0.49% at 16,488.70 after rising 1.2% early. Sixteen of its components were trading in the green. The 50-share NSE index was up 0.4% at 4,937.50.
The benchmark, which fell 2.8% on Wednesday to its lowest close in more than two-and-a-half months, has lost 6% this year as foreign funds pulled out almost $1 billion in May and trimmed the net inflow since the start of January to $5.6 billion.
“A sharp fall from here is not likely. Prices are at reasonable levels for one to start buying from a long-term perspective,” said Neeraj Dewan, director of Quantum Securities.
He said the euro zone woes were a drag on the market, but strong domestic growth should help.
ONGC jumped 10.9% to Rs1,141, its highest level in 3-months, after the government more than doubled the prices of natural gas produced by state firms.
Brokerage Ambit Capital raised its rating on ONGC to “buy” from “hold”, noting the gas price increase was the first in almost five years and will help the company.
The stock later trimmed gains and was trading up 8.4%.
Telecoms shares rose after an auction of 3G spectrum ended on Wednesday, with proceeds reaching $14.6 billion or nearly double the government estimate.
Morgan Stanley upgraded its view on Indian telecoms to “in-line” from “cautious”, citing the 3G spectrum auction close, signs of tariff wars subsiding and quarterly results that showed revenue growth driven by higher minutes of usage.
The cheer may be short-lived as the impact of high capital expenditure for third-generation mobile spectrum and equipment would remain a drag.
“Eventually, telecom stocks will come under pressure. No one has got an all-India licence, still the amount they are paying is not small. Their balance sheets will be stretched,” said Jagannadham Thunuguntla, equity head SMC Capital in New Delhi.
Top mobile operator Bharti, which is paying $2.6 billion, was up 1.1% after rising as much as 2.4% early, while second-ranked Reliance Communications rose 1.9%, trimming gains of 5.8%.
State utility Satluj Jal Vidyut Nigam rose more than 7% before dropping below their IPO price in a debut that is unlikely to inspire investors in upcoming government offerings. The stock was trading at Rs25.90, lower than the issue price of 26.
In the broader market, gainers were almost equal to the number of losers on volume of 120 million shares.