Mumbai: Indian shares rebounded from an early slide and ended little changed on Tuesday, propelled by gains in energy giant Reliance Industries and explorer Oil and Natural Gas Corp.
Still, the market’s undercurrent was weak as worries that the nascent recovery in the global economy has been priced into equity markets worldwide hit investor confidence across Asia.
“Valuations in the market are not cheap. To justify such prices, the government needs to come out with big-bang reforms,” Gopal Agrawal, head of equity at Mirae Asset Global Investment Management (India), said.
The 30-share BSE index ended down 0.02%, or 2.21 points, at 14,324.01, after falling 2.2% at one stage. Seventeen stocks declined. The 50-share NSE index rose 0.3% to 4,247.
But Reliance Industries, which has the most weight in the index, rose 3.3% to Rs2,016.05 after falling 17.2% since last Monday when it received an unfavourable court ruling on gas supplies.
It was helped after the head of NTPC Ltd said the utility was open to buying Reliance’s gas at $4.2 per million metric British thermal unit except for the plants under dispute in a court. NTPC shares rose 2.5% to Rs195.85.
Oil and Natural Gas Corp gained 3.3% to Rs1,026.45 after the Economic Times said the state-run explorer struck oil and gas in three new blocks.
The major losers were private-sector lenders ICICI Bank and HDFC Bank, engineering and construction firm Larsen & Toubro and diversified cigarette maker ITC Ltd.
The benchmark index had dropped 7.4% in the previous eight sessions as investors took profits on a 14-week, 83% rally that was halted last week on concerns about rising valuations.
Foreign funds, which had pumped almost $8 billion into the market since mid-March through 12 June when the benchmark hit a 2009 high, pulled out more than $350 million last week.
Still, expectations for reforms such as relaxation of foreign investment rules in the insurance and pension sectors and stake sales in state-run firms when the government announces the budget on 6 July should provide support, analysts said.
“There is not much scope for the market to fall much more,” said Amitabh Chakraborty, president of equities at Religare Securities. “A lot of the stocks like Reliance have been oversold over the past week.”
Other Asian indexes fell steeply, with Japan’s Nikkei and the MSCI’s measure of other Asian markets each sliding 2.8%.
US stocks suffered their worst one-day loss in two months on Monday in a broad-based sell-off, as investors reconsidered the health of the economy.
A recovery from a severe recession in the euro zone’s services sector stalled in June as consumers remained nervous, but factories fared better as they ran down stocks, key surveys showed on Tuesday.
ICICI Bank fell 4.1% to Rs697.45, while ITC slid 3.1% to Rs196.50.
HDFC Bank dropped 3.6% to Rs1,485.55, while Larsen eased 1.6% to Rs1,485.95.
In the broader market, losers led gainers 1,466 to 1,123 on relatively moderate volume of 405.5 million shares.