Mumbai: Indian shares shrugged off a sluggish start and nudged higher for the first time in three sessions on Tuesday, powered by engineering conglomerate Larsen & Toubro.
Firmer world markets and signs euro zone finance ministers are making progress on the details of a rescue package for the debt-ridden countries helped support sentiment, traders said.
“However, apart from stock-specific activity, the overall mood is not promising. We need to wait and see how the situation in Europe unfolds before taking major calls,” said Vaibhav Sanghavi, director of Ambit Capital.
The 30-share BSE index closed up 0.24%, or 40.20 points, at 16,875.76 points, after falling 0.5% at one point. Nineteen of its components advanced. The 50-share NSE index closed 0.1% higher at 5,066.20.
The benchmark, which had shed 2.5% over the previous two sessions, is down 3.9% in May as foreign funds pulled out $665 million, lowering net inflows to $5.9 billion in 2010.
Larsen & Toubro rose 3.3% to Rs1,657.95, its best close in four months, extending the previous day’s gains after the leading engineering and construction firm said it was upbeat about the outlook.
“Potential for revenue upgrades and strong order flows will improve sentiment for L&T in our view,” JPMorgan analysts said in a note, raising the stock to “overweight” from “neutral”. Deutsche Bank upgraded the share to “buy” from “hold”.
On Monday, L&T posted better-than-expected quarterly results and said it expected 20% revenue growth in the current fiscal year due to a pick-up in orders, sending its shares 5% higher.
Oil & Natural Gas Corp climbed 2.2%, after a top government official said India would review its fuel pricing system next month and may allow state-run firms to gradually raise the price of natural gas to level charged by Reliance Industries.
Energy major Reliance Industries, which has the highest weight on the Sensex, added 0.4% to Rs1,020.70. The stock had shed 6% over three previous sessions.
Export-focused outsourcers climbed on hopes their limited exposure to the debt-ridden countries in Europe would not seriously dent their outlook, traders said.
Infosys Technologies and Wipro gained 0.3% and 2.2% respectively after BNP Paribas Securities said on Monday only a fraction of 13-57% revenue that large Indian IT companies get from Europe came from the debt-affected countries there.
“We are therefore leaving our forecasts and our positive sector view unchanged, but will closely watch the developments in Europe,” BNP Paribas said in a note.
Metals stocks such as Sterlite Industries, Hindalco and Tata Steel closed between 0.7% and 1.7% lower as the outlook for metal prices was uncertain.
Leading mobile operators Bharti Airtel and Reliance Communications, which have been battered by a call tariff war, rose 0.5% and 2.4% respectively.
The stocks, the only two in the benchmark index that declined in 2009, are down 18.6% and 16.1% so far this year.
The telecom sector in India has been hammered by a tariff war, rising competition, high bids for third-generation licences and recent recommendation from the regulator over one-time spectrum fee.
Vodafone Group Plc on Tuesday signalled increasing frustration with its key Indian unit, taking a charge of £2.3 billion due to fierce competition and rapidly escalating spectrum costs.
In the broader market, gainers led losers in a ratio of 1.4:1 on relatively lower volume of 368 million shares.