Mumbai: Indian shares extended gains to more than 1% on Friday afternoon as long-term investors looked to enter the market after it dropped 5.7% over the past three weeks.
At 2:37pm, the 30-share BSE index was up 1.1% at 15,173.71 points, with 26 stocks gaining. The 50-share NSE index was up 1.3% at 4,511.75.
Markets erased losses of as much as 1.2% and turned briefly positive in midday trade, led by software-services exporters Infosys and Tata Consultancy after the rupee dropped.
Top telecoms firm Bharti Airtel rose 0.4% to Rs401.80 after the Economic Times newspaper quoted the telecom firm’s chairman, Sunil Mittal, as saying the company was not looking to sweeten its bid to buy a stake in South Africa’s MTN.
At 11:38am, the 30-share BSE index was down 0.3% at 14,972.54 points, with 18 stocks declining, after rising to as much as 15,015.76 earlier. The 50-share NSE index was down 0.2% at 4,445.
Markets had fallen 0.7% in the morninfg as weaker Asian peers and jitters about the economic impact from weak monsoon rains weighed on investor confidence.
Lower commodity prices and mixed US economic data overnight also subdued sentiment.
Diversified cigarette maker ITC eased 1.6% to Rs221.80, while engineering and construction firm Larsen & Toubro dropped 1.7% to Rs1,457.75, leading losses in the main index.
Energy giant Reliance Industries fell 1% to Rs1,879 and state-run explorer Oil and Natural Gas Corp slid 0.5% to Rs1,173.25 as oil eased below $73 a barrel.
Leading financials State Bank of India, HDFC Bank and ICICI Bank were among the other major losers.
By 11:06am, the 30-share BSE index was down 0.7% at 14,905.61 points, with 22 stocks declining, after falling as much as 1.2% earlier. The 50-share NSE index was down 0.7% at 4,424.20.
“In the near-term, the Indian stockmarkets would not be able to escape the negative sentimental impact that arises from the likely repercussions that a highly deficient monsoon may have on India’s GDP,” Angel Broking head of research Hitesh Agrawal said.
However, Agrawal said worries below-normal rainfall will have a significant impact on corporate earnings may be overdone and long-term investors may do well to buy stocks on declines.
Monsoon rains in India during the past week increased to the highest in a month but the main soybean region saw weak rainfall and reservoirs fill up at a much slower rate than normal, putting at risk power supply and winter irrigation.
The benchmark had fallen 4.2% this month, hurt by worries about the weak monsoon, high valuations and looming inflation.
Fears that stocks worldwide have run ahead of fundamentals have risen recently in the wake of a slew of downbeat data from across the world.
The number of US workers filing new claims for jobless benefits last week unexpectedly rose, but factory activity in the US mid-Atlantic region turned positive in August as a jump in new orders broke a 10-month streak of contraction.
Trading could be choppy until clearer signs emerge on the government’s efforts to tackle the weak monsoon, but some analysts say ample liquidity flowing into the emerging markets will support stocks in the near term as investors look to buy on dips.
Government-run State Bank of India slid 1.3% to Rs1,730.05, while private-sector rival ICICI Bank was down 1.5% at Rs708.40.
HDFC Bank slipped 2% to Rs1,451.80.
In the broader market, gainers led losers 1,169 to 881 on relatively light volume of 91.6 million shares.
Asian shares were lower, with Japan’s Nikkei down 1.7%, while MSCI’s measure of other Asian markets fell 1.5%.