Mumbai: Indian shares climbed 0.3% on Wednesday, helped by a rise in European shares, with Reliance Industries and financials leading the rise, but gains were capped as telecom stocks slid on concerns about a spectrum fee proposal.
Leading telecom operators extended losses after the regulator on Tuesday recommended imposing a one-time fee for radio-spectrum beyond 6.2 mega hertz (MHz) based on 3G prices.
The proposal will hit established operators that are already battling a margin-crunching call tariff war.
Meanwhile, bids for one set of nationwide third-generation (3G) mobile spectrum licences in India reached $3.1 billion in an ongoing auction, which would also exert pressure on winning companies’ margins.
“Telecom sector was going through turbulent times. More bad news from regulator is battering the pack even more,” said Rakesh Rawal, head of private wealth management at Anand Rathi. “I would rather stay away from the (telecom) sector for now,” said Rawal,“ who manages $1 billion of wealth.
Top mobile operator Bharti Airtel slid the most in three months as it dropped 8.3% to Rs261.55, Rival Idea Cellular dropped 8.2% while Reliance Communications closed barely changed.
The 30-share BSE index rose 0.32% or 54.28 points to 17,195.81 points, with 19 of its components closing in the green. The 50-share NSE index closed 0.4% higher at 5,156.65 points.
“Since our market is fundamentally well placed, any patchwork over global concerns pushes it higher,” said Rawal.
European shares jumped on signs of continued German growth and Spain’s plans to cut its deficit.
Meanwhile, India’s industrial output grew lower-than-expected in March, weighed down by a partial withdrawal of stimulus measures in Asia’s third-largest economy and a rate hike, data showed on Wednesday.
The 13.5% growth was the sixth straight double-digit monthly expansion, driven largely by robust manufacturing output. Foreign funds have invested a net of nearly $6 billion in Indian stocks so far this year, after a record $17.5 billion in 2009.
Energy giant Reliance Industries, which has the highest weight on the Sensex, rose 1.4% to Rs1,082.
Financials rose on hopes demand for loans will pick up in the world’s second-fastest growing major economy after China.
Top lender State Bank of India rose 1.6% while HDFC Bank climbed 1.1%. Mortgage lender Housing Development Finance Corp gained 0.2%.
Software companies edged up on expectations the massive bailout package in the euro zone would help improve order flow from the continent, dealers said.
Sector leader Tata Consultancy Services rose 0.4%, Infosys Technologies gained 0.7% and Wipro added 1.7%.
In the broader market, gainers outnumbered losers in a ratio of 1.4:1, while 312 million shares changed hands on the Bombay Stock Exchange, slightly lower than the volume on Tuesday.
Elsewhere, the pan-European FTSEurofirst 300 was up 0.6% at 1019 GMT, while the MSCI’s measure of Asian markets other than Japan nudged 0.1% higher.