Mumbai: Indian shares extended gains to more than 1% in midday trade on Tuesday as some long-term investors took advantage of a 5.6% drop over the past three sessions to enter the market.
Energy giant Reliance Industries, which has the most weight in the main index, rose 2.6% to Rs2,038.05, after dropping 4.3% over the past three sessions.
Top utility vehicle maker Mahindra & Mahindra gained 5.1% to Rs797 after sliding 17.6% over the previous three sessions.
At 12:05pm, the 30-share BSE index was up 0.9% at 15,144.13 points, with 20 stocks gaining, after rising to as high as 15,174.53. The benchmark had fallen almost 1% earlier. The 50-share NSE index was up 1% at 4,481.20.
Markets were choppy in the morning, as worries over a shortfall in crucial monsoon rains, pricey stocks and mixed Asian markets kept investor confidence in check.
Energy giant Reliance Industries, consumer-goods firm Hindustan Unilever and leading utility vehicle maker Mahindra & Mahindra rose as some long-term investors looked to enter the market after it dropped 5.6% over the past three sessions.
Top mortgage lender Housing Development Finance Corp, engineering and construction firm Larsen & Toubro and diversified cigarette maker ITC were among the major losers.
By 11:19am, the 30-share BSE index was up 0.8% at 15,133.54 points, with 21 stocks advancing, after falling as much as 0.97% earlier. The 50-share NSE index was up 1% at 4,481.20.
“It certainly looks like some buying at lower levels is happening. The market needs to take a breather from its recent downfall,” Gajendra Nagpal, chief executive of Unicon Financial, said.
“There was a case for the market to find some support at these levels, but one can’t attribute too much of credibility to this support.”
India’s monsoon shortfall worsened to 28% at the weekend, raising fears that the June-September season may turn out to be as bad as 2004 when summer crop output fell 12% after a drought.
Rains are crucial to India’s domestic-demand-led economy, and a dry weather - in a country where a majority of the 1.1 billion people live in villages - has stoked concerns about a nascent economic recovery.
Indian shares slid 3.25% last week after jumping 16% over the previous three weeks, when it rode a worldwide equities rally on better-than-expected corporate earnings and improving signs of a global economic recovery.
The main index has leapt 87% from a 2009 low in early March, and is still up more than 55% this year after slumping by more than half in 2008.
This has raised concerns about rich valuations, but analysts say a rush of liquidity pouring into emerging markets will help offset those concerns in the near term.
Reliance Industries, India’s biggest listed firm with the most weight in the main index, gained 2.6% to Rs2,037.20.
Hindustan Unilever rose 1.7% to Rs264.85, and Mahindra & Mahindra climbed 4.8% to Rs794.70, after falling 10.3% and 17.6%, respectively, over the past three sessions.
Housing Development Finance Corp fell 1.7% to Rs2,289, while ITC slid 0.9% to 222 rupees. Larsen & Toubro eased 0.2% to Rs1,436.25.
In the broader market, gainers led losers 1,203 to 889 on relatively moderate volume of 106.7 million shares.
Asian shares were mixed on Tuesday, with Japan’s Nikkei up 0.6%, while MSCI’s measure of other Asian markets was flat.