Mumbai: Shares ended up 0.2% in choppy trade on Monday as firm world equities helped them recover slightly from last week’s 2.1% decline, but investors were not convinced the strength in the market was here to stay.
The 30-share BSE index closed 0.16%, or 29.04 points, higher in choppy trade to 18,037.19, with 21 of its components advancing. The 50-share NSE Nifty closed barely changed at 5,396 points.
The index had declined 10.6% in January and is down more than 12% year-to-date.
“There is lack of confidence in the market. People are using any rise to sell,” said Neeraj Dewan, director of Quantum Securities.
Foreign funds have pulled out $1.35 billion this year until 3 Febeuary, on concerns over high inflation and as optimism over prospects of a U.S. economic recovery diverted attention.
“Unless there is any significant improvement on the macro front, any gains will be sold,” Dewan said.
Prime Minister Manmohan Singh said on Friday high headline inflation was beginning to pose a serious threat to India’s high growth plans.
Economic growth in Asia’s third-largest economy for the 2010/11 fiscal year is estimated to grow at 8.6%, a government statement said on Monday.
Cipla shed nearly 3% after the drugmaker reported a larger-than-expected 19.4% drop in third-quarter net profit late on Friday.
“While management remains upbeat about the growth prospects for the company, its time-frame for delivery of returns to shareholders may be longer than current market expectations,” Emkay Global said in a note.
The brokerage downgraded the stock to “reduce” from “accumulate.”
Cigarette-to-hotel business ITC recovered from Friday’s 4.2% decline and led the gains with a 2.6% rise.
Energy giant Reliance Industries, which has the highest weight on the main index, climbed 1.1%. It had declined 2.5% on Friday.
Explorer Cairn India rose 1% after the Indian oil secretary said on Sunday he was hopeful of finding a “positive solution” to Vedanta Resources’ deal to buy a controlling stake in the unit of Cairn Energy.
Non-ferrous metals producer Sterlite Industries firmed 0.4% as London copper prices hit record high.
Tata Steel, world’s seventh-largest maker of the alloy, gained 0.6%, while aluminium producer Hindalco dropped nearly 2%.
In the broader market, losers were 1.5 times the number of gainers in a low volume of 268 million shares.
World stocks were hovering near a 29-month high on further signs of global economic recovery.
The MSCI world equity index rose 0.3% by 1045 GMT, while the emerging markets index edged 0.1% lower.
State-run oil marketing companies Bharat Petroleum Corp, Hindustan Petroleum Corp and Indian Oil Corp rose between 1% and 1.7%, as international crude oil prices declined.
Separately, Bharat Petroleum said it discovered gas in offshore Mozambique.
Lanco Infratech and Punj Lloyd shed nearly 4% and nearly 2%, respectively, ahead of their quarterly earnings announcement.
Bhushan Steel climbed 1% to Rs 401.80 after the steel maker said its October-December net profit rose 23.3%.