Mumbai: Markets reversed early losses and rose 0.3% on Thursday as investors picked up beaten down stocks, but the gains are seen as temporary amid caution due to stubbornly high domestic inflation and rising interest rates.
Investors were also risk averse before a European leaders’ meeting, which could focus on Greece’s debt crisis, and after the Federal Reserve cut its forecasts for US economic growth, which pulled down Asian shares.
Energy giant Reliance Industries , which has the highest weighting on the BSE main index, firmed 1.2% on bargain hunting and led the gainers. The stock has dropped more than 18% since the end of March.
At 10:07am, the 30-share BSE index was up 0.33% at 17,588.62 points, with half of its components advancing. It had started lower. The 50-share NSE index was up 0.1% at 5,281.70.
The index is down more than 14% year-to-date, and is the worst performer among major Asian markets. MSCI’s measure of Asian shares other than Japan is down 2.9% so far in 2011.
“The outlook is still very cautious. So, it looks this is just a small recovery after the decline,” said Ambareesh Baliga, chief operating office of Way2Wealth Securities.
“It is more of a speculative recovery than anything else. I don’t think it will last too long.”
Foreign funds have been offloading Indian equities recently, hurt by concerns over a slowdown in economic growth.
They have sold a net of $628 million in a total of eight sessions to 21 June.
Rate sensitive stocks mostly declined on worries the central bank may continue with its hawkish stance as it battles inflation.
Auto companies Tata Motors , Maruti Suzuki , Bajaj Auto and Mahindra & Mahindra were down between 0.4% and 2.1%.
Private lender HDFC Bank and mortgage lender Housing Development Finance Corp shed 0.5% and 0.9%, respectively.
Leading lenders State Bank of India and ICICI Bank bucked the trend and gained 0.6% and 0.2%, respectively.
Around 103 million shares were dealt on the NSE, where losers were nearly double the number of gainers.
Reliance Infrastructure firmed 1.1% to Rs 534.10 after the chief executive of the Indian utility, controlled by billionaire Anil Ambani, told Reuters it is in talks with investors and funds to sell stakes in its roads, metro lines, and transmission businesses.
State-run oil marketing companies Bharat Petroleum Corp , Hindustan Petroleum Corp and Indian Oil Corp were up between 0.1% and 0.4%, cheering a decline in crude oil prices.
Oil fell more than $1, reversing the previous session’s gains, as a rise in the dollar overshadowed a surprise draw in gasoline stockpiles in the world’s top consumer US.