Mumbai: The BSE Sensex climbed 0.2% higher on Monday tracking world equities, but gains were limited by outsourcers which dragged on US economic recovery concerns.
Tata Steel rallied as much as 3.8% to Rs529.45 after the world’s seventh-largest steelmaker’s unit Corus said on Friday it had reached an agreement with Thailand’s SSI over the potential $500 million sale of its mothballed Teesside plant in northern England.
The steelmaker closed 3.5% higher.
”We consider the potential sale of TCP facility as strategically positive for Tata Steel,” Goldman Sachs said in a note while maintaining a ”buy” rating on the stock.
Goldman Sachs said the current price does not reflect Tata Steel’s strong growth trajectory driven by robust profitability at its India operations and sustainable recovery at Corus.
The 30-share BSE index, which rose as much as 1.2% intra-day, closed 0.19% or 33.70 points higher at 18,032.11, with 17 of its components closing in the green.
”We went up this morning as world stocks had gained. But, there is fatigue in the market now,” said Arun Kejriwal, director of research firm KRIS.
”It is lack of buying more than selling pressure, which is why we have not been able to hold on to gains.”
Foreign funds have pumped in $12.7 billion year to date, pushing the main index 3.2% higher. Primary market offerings also attracted a portion of these investments.
The main index has outperformed broader indices such as the MSCI world equity index and the more volatile emerging markets index which are down 5.6% and 1.2% respectively year to date.
Corporate India’s focus was on the direct tax code bill, which was placed before parliament for approval, aimed at simplifying procedures for investors and bring in more revenue by widening the tax net.
One of the key points in the bill that could impact firms is the proposal to hike the minimum alternate tax (MAT) rate to 20% from 18%.
MAT is applicable to those firms which do not show book profits liable to tax, as they claim a raft of exemptions on account of being in capital intensive industries.
Outsourcers shed the most on concerns over the economic recovery in the United States, the world’s largest economy.
U.S. Federal Reserve Chairman Ben Bernanke said on Friday the economic recovery has softened more than expected and the Fed is ready to take further steps if needed to spur the stumbling economy.
Leading software exporter Tata Consultancy Services dropped 1.1% while rival Infosys Technologies declined 0.5%.
State-run explorer Oil & Natural Gas Corp extended gains and climbed 2%, as the latest oil discovery in an exploratory well, Vadatal-1, a block on India’s western onshore basin, kept the sentiment upbeat.
Losers outnumbered gainers in the ratio of 1.2:1 in the broader market in a relatively lower volume of 360 million shares.
The 50-share NSE index, or Nifty, edged 0.1% higher to 5,415.45 points.
Power Grid Corp of India climbed 4.2% to Rs108.70, after the state-run transmission utility was shortlisted for a multi-billion power transmission deal in Nigeria.
Jubilant Organosys rose 1.5% to Rs347.20 as the drugmaker said it has signed a long-term contract worth $33 million with a U.S. life sciences firm for its custom research and manufacturing services business.