Mumbai: Wiping off early losses, the Bombay Stock Exchange benchmark Sensex gained over 48 points at noon on Tuesday on revival of buying in blue-chip stocks at existing attractive levels.
The Sensex, which had lost 253 points at the outset, rebound to show a gain of 48.13 points at 14,923.65 at 12:00pm, following a rise in stocks of power, capital goods and banking segments.
The National Stock Exchange index Nifty rose 16.90 points at 4,500.90. The Nifty had lost nearly 99 points in the opening session.
Sensex fell 0.1% in the morning as tepid US regional manufacturing data dented optimism across Asia and sparked profit-taking on an 85% rally since early March.
But traders said there was some buying as some longer-term investors took advantage of the drop to enter the market and the index erased earlier losses of up to 1.7%.
“There is no doubt this is a healthy correction. The market has held up very well recently, and so we could see some consolidation over the next few sessions,” Hitesh Agrawal, head of research at Angel Stock Broking, said.
Reliance Industries extended losses into a second session, a 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.
Reliance fell 1% to Rs2,158, after dropping 7.5% in the previous session.
Non-ferrous metals producer Sterlite Industries fell 5% as copper prices in China retreated for a fourth straight day on Tuesday.
Top telecoms firm Bharti Airtel, which is in exclusive merger talks with South Africa’s MTN, was another major heavyweight drag on the index, down 1.4% at Rs807.
By 11:15am, the 30-share BSE index was down 0.1% at 14,855 points, with 18 stocks declining, after falling as much as 1.7% earlier. The 50-share NSE index was flat at 4,487.50.
Government-run State Bank of India rose 4% and engineering and construction firm Larsen & Toubro gained 1.1% to Rs1,523.50 to limit losses.
The Indian market has raced up 85% from a 2009 low in early March, largely driven by foreign funds which pumped more than $7.5 billion into the market since mid-March on growing optimism the world economy was healing.
The stock market also received a boost after the ruling Congress-led coalition was re-elected last month, raising hopes that the strong 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, uncertainty about proposed reforms 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 yawing fiscal deficit, analysts said.
“There could be a recovery ahead of the budget in anticipation of the reforms the government could come out with,” Agrawal said.
“The bulls are not likely to give up very easily.”
In the broader section, losers led gainers almost 2 to 1 on relatively moderate volume of 102.6 million shares.
Asian shares were lower on Tuesday, with Japan’s Nikkei down 2.5%, while MSCI’s measure of other Asian markets fell 0.4%.
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.