Mumbai: Shares rose for a third straight session, climbing 0.4% amid choppy trade on Tuesday, but investors doubted the sustainability of the rally as foreign funds remained on the backfoot.
The relief rally in the local equity markets continued led by the gains in the financials, oil & gas, capital goods, banking and auto stocks. This pre-budget rally is on the back of short-covering of positions and market is likely to consolidate in coming days ahead of union budget.
Financials led the rise with State Bank of India, ICICI Bank and HDFC Bank climbing between 0.2% and 2%, helped by the broader market rally.
Reliance Communications closed 4.2% higher, reversing a 2.3% slide following a 57% drop in December-quarter profit, its sixth straight quarterly fall, hit by lower call prices and debt servicing costs. The stock is down 30% this year.
In the BSE sectoral space major indices were in green, oil and gas up by 1.85%, banking up by 1.53%, PSU up by 1.10%, auto up by 0.71%, power up by 0.14% and consumer durables (CD) up by 0.13%, were the major gainers .
The 30-share BSE index gained 0.39% or 71.60 points to 18,273.80, its highest close in nearly two weeks, with 16 of its components closing in the green. The 50-share NSE index firmed 0.5% to 5,481 points.
“I don’t see much conviction in these gains. It is just a temporary bounce back. Investors are looking at opportunities to go short,” said Gajendra Nagpal, CEO of Unicon Financial.
“The buying interest does not seem to be coming from across the board,” he said, adding, foreign funds had been net sellers of stocks in four sessions to 11 February.
Investment by foreign funds, one of the key drivers of Indian equities, has been declining, hurt by domestic corruption scandals and stubborn inflation.
Foreign funds have pulled out around $1.8 billion from Indian stocks this year, which has seen the main index shed nearly 11%. An improvement in economic conditions in the developed world has diverted some flows away from the emerging economies.
Among its emerging market peers, China’s Shanghai Composite index and Russia’s RTS Indea have gained 3.2% and 6.7% respectively, while Brazil’s Bovespa has declined nearly 4%.
The top gainers on the Sensex were RCom up by 4.16%, RIL up by 2.90%, Tata Motors up by 2.41%, Bajaj Auto up by 2.16% and Tata Power was up by 2.14%.
On other hand, JP Associate down by 3.04%, Hindalco Industries down by 2.96%, DLF down by 2.80%, BHEL down by 2.45% and L&T down by 2.16% were loser on the index.
Apart from Reliance Comm, other Anil Ambani-led companies also surged in late trade. Reliance Infrastructure, Reliance Power and Reliance Capital firmed between 1.1% and 9.1%.
Unitech shed 3.5% after the second-biggest listed real estate company reported a 37-percent fall in quarterly profit after market hours on Monday, as high property prices and borrowing costs hurt demand.
Tata Steel the world’s seventh-largest maker of the alloy, closed 0.4% lower ahead of its December-quarter earnings. Analysts expect quarterly net profit to have more than doubled.
Tata Power firmed 2.1% after the power utility said late on Monday its third-quarter profit rose 8% from year ago.
Among world stocks, European markets gained weight after cautious start. Asian markets ended mixed on Tuesday, with Japanese and Taiwanese stocks settling higher, supported by tamed China’s CPI. Hong Kong shares retreated amid worries that price pressures on the mainland will remain at elevated levels. Japan’s Nikkei stock average edged up to register a 10-month closing high after Chinese inflation data helped ease concerns that the country will have to tighten monetary policy more aggressively.
Tata Motors zoomed 2.4% to Rs 1,237.85 after the vehicle maker said its global vehicle sales rose 16% in January to 98,998 units.
Ispat Industries shed 1.7% to Rs 22.75 after the steelmaker slipped to a loss of 4.09 billion rupees in the December quarter from a profit of 188.7 million rupees a year ago.
Jaiprakash Power Ventures closed 1.7% higher at Rs 41.40 after parent Jaiprakash Associates said late Monday it was planning to raise Rs 3,500 crore for its power unit through a follow-on share sale or issue of global depositary receipts.