Mumbai: Indian shares rose 1.3% on Tuesday as investors covered their short postions after the market dropped 4.1% to its worst close in a month in the previous session.
Reliance Communications flip-flopped after sources told Reuters the No. 2 telecoms firm was in talks to buy the African assets of Kuwait’s Zain. The Times of India newspaper said Zain’s African operations, Celtel, were valued at $10 billion.
Shares of Reliance Communications were up 2.3% at Rs251.10 after falling as much as 0.9%.
Leading financials such as government-run State Bank of India and private-sector rival HDFC Bank, and consumer-goods firm Hindustan Unilever were among the major gainers.
But domestic economic concerns after poor rains this year and a string of recent data that has renewed doubts about a global recovery kept investors wary.
Losses in top mortgage lender Housing Development Finance Corp and outsourcer Infosys Technologies weighed on the main index.
“It’s reasonable that there should be some short-covering in the market today after yesterday’s fall,” V K Sharma, head of research at Anagram Stock Broking, said.
“But we believe investors could go short again in the short term and the market could test lower levels once more.”
By 11:20am, the 30-share BSE index was up 1.3% at 14,972.74 points, with 26 stocks advancing, after falling as much as 0.3% earlier. The 50-share NSE index was up 1.3% at 4,445.60.
On Monday, the benchmark fell the most since a 5.8% drop on 6 July, when the government announced a budget that disappointed investors expecting bold economic and financial reforms.
A string of recent downbeat data has renewed doubts about a global economic recovery, and pushed down equity markets worldwide as investors fret about stocks that have risen ahead of fundamentals.
In India, concerns that poor monsoon rains - crucial for the country’s domestic-demand-led economy - will dent growth has added to the gloom. Traders say the market would be choppy until clarity emerged on the government’s response to the weak monsoon.
State Bank of India, the country’s top lender, rose 2.1% to Rs1,748.95, while HDFC Bank climbed 2% to Rs1,436. Hindustan Unilever added 1.8% to Rs254.
Housing Development Finance Corp shed 0.2% to Rs2,248, while No. 2 outsourcer Infosys eased 0.2% to Rs1,979.05.
In the broader market, gainers led gainers 2 to 1 on relatively moderate volume of 108.7 million shares.
Asian shares were lower, with Japan’s Nikkei flat, while MSCI’s measure of other Asian markets fell 0.3%.