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Noon: Markets flip-flop; low inflation initiates buying

Noon: Markets flip-flop; low inflation initiates buying
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First Published: Thu, Jun 11 2009. 12 10 PM IST
Updated: Thu, Jun 11 2009. 12 10 PM IST
Mumbai: Indian shares were choppy on Thursday, as investors paused for breath after the market had jumped more than 90% since early March.
The Bombay Stock Exchange benchmark Sensex wiped-off early losses to quote higher by nearly 102 points at noon on revival of buying after lower inflation data of 0.13% for 30 May.
The 30-share BSE Sensex, which lost nearly 90 points in the opening session, bounced back to trader higher 101.93 points at 15.568.74, with heavy-weights like Tata Steel and HDFC Bank recording fresh gains. The wide-based National Stock Exchange index Nifty rose by 24.30 points to 4,679.25.
“There is one section of the market where investors who bought shares at much lower levels are sitting on a lot of profits, and they will be tempted now to cash in at every rise,” Hitesh Agrawal, head of research at Angel Stock Broking, said.
Outsourcer Infosys Technologies, which has jumped by more than half over the past three months, was targeted by sellers.
State-run explorer Oil and Natural Gas Corp and energy giant Reliance Industries, which has double in the past three months, were also among the major losers.
But gains in private-sector lender HDFC Bank and top telecoms firm Bharti Airtel supported the main index.
By 11:45am, the 30-share BSE Sensex was up 0.3% at 15,512.31 points, with gainers and losers evenly matched, after falling as much as 1%. The 50-share NSE index was up 0.4% at 4,674.70.
Foreign fund flows of more than $7 billion since early March have helped boost the benchmark by 60% since the start of the year, after it slumped by more than half in 2008 when foreign investors pulled out about $13 billion.
Hopes for pro-market reforms such as privatisations and relaxation of foreign investment rules in the insurance and pension sectors, and expectations of faster pace of economic growth in the latter half of the year all lifted sentiment.
But rising valuations, a lack of clarity on the outlook for corporate earnings growth and slow implementation of reforms are concerns.
India’s annual inflation rate, expected by midday, is expected to hit a record low near zero at the end of May and turn negative by July, but rising prices of oil and other commodities should reverse the tide by September, analysts said.
“There is another section of the market which is expecting a lot out of the budget and are buying as there is a lot of liquidity on the sidelines,” Agrawal said.
Investors will wait for the budget, to be presented on 3 July, to get more clarity on proposed reforms and how they may help or hinder the market, traders said.
No. 2 IT-services firm Infosys fell 2.4% to Rs1,760.90. ONGC dropped 2.5% to Rs1,135.95, while Reliance Industries, which has the most weight in the main index, eased 0.4% to Rs2,310.
HDFC Bank gained 3.8% to Rs1,551, while Bharti, which is in merger talks with South Africa’s MTN, rose 3.4% to Rs863.55.
In the broader section, losers led gainers 1,389 to 1,014 on relatively moderate volume of 212.6 million shares.
Asian shares were mixed, with Japan’s Nikkei down 0.1%, while MSCI’s measure of other Asian markets rose 0.55%.
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First Published: Thu, Jun 11 2009. 12 10 PM IST
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