Mumbai: Indian shares were on course to stretch quarterly gains for seven in a row, their longest winning run in at least 20 years, riding a surge in foreign portfolio investment.
Trading was choppy on Thursday on the last day for monthly derivatives contracts on the National Stock Exchange and weak Asian markets, but analysts said the outlook remained firmly upbeat.
“Barring the expiry today and near-term event risk from the Ayodhya verdict, the longer-term outlook is definitely bullish,” said Vaibhav Sanghavi, director of Ambit Capital, citing an 8.5% economic expansion forecast this year, lagging only China among major economies.
A court is set to rule on Thursday whether Hindus or Muslims own a disputed religious site at Ayodhya in northern India, a judgment many fear could trigger an outbreak of communal rioting.
At 10:29am, the 30-share BSE index was down 0.27% at 19,902.27 points, with 25 of its components declining.
The benchmark is up 10.7% in September boosted by net foreign fund investment of more than $5 billion, and on track to log its best monthly gain since May 2009.
The index is up 12.5% this quarter.
Cash-flush overseas investors facing an uncertain outlook in the developed world are betting India’s fast-expanding economy will offer good returns.
Foreigners have bought shares worth $18.2 billion so far in 2010, pushing the BSE index 13.9% higher. If the inflow is sustained till the year end it would be a record beating $17.5 billion invested in 2009.
Mahindra Satyam tumbled as much as 6.7% after the outsourcer reported a net loss for 2009 and 2010, giving the first view of its financials nearly two years after it was hit by India’s biggest corporate fraud.
JPMorgan downgraded stock to “neutral” from “overweight” as the restated financials restored normalcy but the progress was likely to be slow.
Financials climbed on expectations loan demand will keep pace with the robust economy and boost earnings.
Mortgage lender Housing Development Finance Corp rose 1.7%. ICICI Bank and HDFC Bank climbed 0.4% and 0.2% respectively.
In the broader market, losers outpaced gainers in a ratio of 1.5:1 on volume of 143 million shares.
The 50-share NSE index was down 0.2% at 5,978.50.
Elsewhere, the MSCI’s measure of Asian markets other than Japan was down 0.4%, while Japan’s Nikkei dropped 1.2%.
Tata Steel dropped 1% to Rs646.60 after the Nikkei business daily reported the Indian firm and Japan’s Nippon Steel Corp were in talks to build a blast furnace facility in India with an initial investment of up to $3.6 billion.
Sugar makers such as Bajaj Hindusthan, Shree Renuka Sugars, Dhampur Sugar, Dwarikesh were up between 1.2% to 3.9% after the farm minister said millers would need to sell only 10% of their output at low, state-set rates from 20% now.