Mumbai: Indian shares flip-flopped on Tuesday ahead of monthly inflation data that could throw light on future monetary policy action, while an ongoing probe into sale of telecom licences cheaply also kept investors wary.
The Reserve Bank of India (RBI) is widely expected to hold interest rates at its policy meeting on Thursday, after raising six times between mid-March and early November to cool inflation.
The wholesale price index in November is expected to have risen 7.48% from a year earlier, according to a Reuters poll. That rise would be slower than an 8.58% increase in October -- its lowest reading in 10 months. The data is due by 12:00pm.
A slowdown in inflation pressures would help head off another increase in rates in the near term.
Motorcycle maker Hero Honda fell as much as 2.6% after the Economic Times reported the founder of India’s Hero Group is set to buy Honda Motor’s 26% stake in the joint venture for about $1 billion or half the current value of the stake.
By 10:27am, the 30-share BSE index was trading up 0.05% at 19.701.67, with 12 of its components gaining. It traded in the negative earlier.
“The market will continue in the seesaw mode for a while,” said R.K. Gupta, managing director of Taurus Mutual Fund. “This week is eventful with advance tax numbers coming up and the RBI policy on Thursday.”
Quarterly tax payments by companies are due by mid-December and the figure will indicate the outlook for profits, a key driver for the stocks.
The BSE index is up 12.8% so far in 2010, helped by net foreign fund investment of $28.7 billion in Indian equities.
A Reuters poll conducted earlier this month showed the benchmark index may rise to 22,000 by the middle of 2011 and to 23,350 by the year end.
Private-sector lenders ICICI Bank and HDFC Bank declined 0.5% and 0.8% respectively, while market leader State Bank of India bucked the trend and edged 0.2% higher.
The banking sector index was down 0.5% after rising 3.5% in two earlier sessions. Metal producers climbed on a bullish outlook for prices, traders said.
Tata Steel, the world’s seventh-largest steelmaker, rose 1.3%, while non-ferrous metals producer Sterlite Industries and aluminium maker Hindalco climbed 2.8% and 0.9% respectively.
Gupta said an investigations into alleged corruption in the sale of telecom licences and radio waves would continue to cast a shadow on the market.
On Monday, the government said one investigation would look into “shortcomings and lapses” in the 2G licensing process and suggest remedial measures for future.
The scandal, which a government auditor has said cost $39 billion in lost revenue to the authorities, has resulted in the resignation of a telecom minister and a federal agency has searched offices and homes of several officials.
In the broader market, gainers were more than double the number of losers on volume of 85 million shares.
The 50-share NSE index was up 0.05% at 5,910.85.
The MSCI’s measure of Asian markets other than Japan was up 0.3%, while Japan’s Nikkei was barely changed.
Oil and Natural Gas Corp rose 0.5% to 1,335.05 rupees after an oil ministry official said on Monday the state-run explorer was in talks with Russia’s Bashneft to help the oil firm develop the giant Arctic Trebs and Titov oil fields.
Reliance Communications extended gains and was up 0.5% at Rs 129.30 after it launched third-generation mobile phone services on Monday in four cities, and said it would cover 13 telecoms zones by coming March.