Mumbai: Shares eked out a modest rise of 0.1% on Monday after investors locked in profits ahead of the budget next week, erasing early gains of as much as 1.3%.
Lower Asian markets, where weaker oil prices hit energy shares, also encouraged investors to cut their long positions, traders said.
Leading petrochemicals and refiner Reliance Industries climbed on media reports a court had approved its plan to absorb unit Reliance Petroleum.
Tata Motors, the country’s top vehicle maker, fell almost 8% after it posted its first annual loss in eight years late on Friday.
Export-focused outsourcers led by Tata Consultancy Services and Infosys Technologies Ltd dropped more than 2% each ahead of quarterly earnings that begin next month.
“There are local factors but we are partly following the global trend,” said Deepak Jasani, head of retail research at HDFC Securities. “Some nervousness may come in before the budget, but we expect the underlying positive sentiment to continue.”
The government is likely to keep tax rates broadly unchanged in its budget next Monday and explore other avenues such as 3G wireless spectrum auction and stake sales in state firms to raise cash.
However, there were concerns about how the government aimed to plug its burgeoning fiscal deficit.
The 30-share BSE index Sensex ended up 0.14%, or 21.10 points, at 14,785.74 points, with 13 stocks closing higher. Index heavyweight Reliance Industries rose 2.8% to Rs2,084.95, its highest close in nearly two weeks.
State-run explorer Oil and Natural Gas Corp gained 2.6% to Rs1,068.05 on hopes the government would partially deregulate auto fuel pricing and help ease subsidy burden for state energy firms.
Top developer DLF and rival Unitech rose on hopes of easing cashflows after the latter got commitment to raise about $575 million from institutions for its second share sale in as many months.
DLF rose 3.8% to Rs338, while Unitech gained 3.6% to Rs85.30.
Top outsourcer Tata Consultancy Services fell 2.8% to Rs385.90, Infosys lost 2.4% to Rs1,783.75 and while Wipro shed 1.3% to Rs378.65.
Tata Motors fell 7.8% to Rs313.85.
Sun Pharmaceuticals dropped 3.5% to Rs1,100.35 as the company withdrew its 2009-10 sales guidance after US authorities last week seized drugs made by its unit, Caraco Pharmaceutical, for violating manufacturing standards.
“There was profit-taking today, the market’s taking a breather. But the long positions are there, the bias will remain upward,” said Gajendra Nagpal, chief executive at Unicon Financial Intermediaries.
Overall, the market sentiment remained positive. In the broader market, gainers led losers 1.7 to 1 on moderate volume of 395 million shares.
The 50-share NSE index Nifty ended up 0.35% at 4,390.95 points.