Mumbai: Indian shares rose more than 1% on Wednesday afternoon, led by engineer Larsen & Toubro and technology stocks, after falling as much as 0.8% at one stage.
At 2:10pm, the 30-share BSE index .BSESN was up 0.92% at 14,452.77 points, with 25 stocks gaining, after hitting 14,472.96.
Markets fell 0.5% as private-sector lender ICICI Bank and outsourcer Infosys Technologies were pulled down by fresh worries about a nascent economic recovery.
Engineering conglomerate Larsen & Toubro bucked the trend and rose in anticipation of higher government spending on infrastructure, while state-run explorer Oil and Natural Gas Corp firmed ahead of its financial results.
By 11:20am, the 30-share BSE index was down 0.5% at 14,255.64 points, with 14 stocks declining, after rising as much as 0.8% in early trade. The 50-share NSE index was down 0.3% at 4,235.85.
The benchmark had fallen 7.4% over the past two weeks on profit-taking after a 14-week rally that saw it jump 83%.
“Many stocks had doubled and even tripled during the rally, while the economy showed no signs of recovery so fast,” D D Sharma, vice president at Anand Rathi Securities, said.
Concerns about rising valuations have led to a slowdown in foreign fund inflows, but analysts said investors could look to take advantage of the drop to enter the market as its longer-term prospects were good.
The government’s budget on 6 July is expected to relax foreign investment rules and pursue stake sales in state-run firms to help reduce a burgeoning fiscal deficit and focus on lifting sagging economic growth, traders said.
However, concerns equity markets worldwide had overestimated the extent of the global economy’s recovery, and worries a delayed monsoon could hit the farm sector that accounts for about a sixth of economic output will weigh on sentiment.
“Last year, rural demand saved the economy to an extend. But this year the late monsoon could affect rural demand and hurt several sectors including telecoms and consumer goods,” Sharma said.
ICICI Bank fell 2.5% to Rs680, while No. 2 IT-services firm Infosys dropped 1% to Rs1,729.90.
Reliance Industries, which has the most weight in the main index, eased 1.3% to Rs1,989.50.
ONGC, the country’s top oil producer, rose 1% to Rs1,037.05, extending gains of 3.3% in the previous session after the Economic Times said the explorer struck oil and gas in three new blocks. Larsen climbed 0.8% to Rs1,498.30.
In the broader section, gainers led losers 1,231 to 809 on relatively moderate volume of 136.1 million shares.
Asian shares were higher on Wednesday, with Japan’s Nikkei up 0.5%, while MSCI’s measure of other Asian markets rose 1.6%.