Mumbai: Markets rose 1% on Tuesday, recouping some of the previous day’s losses on firm Asian markets, but trading was choppy as inflation worries and a slowdown in economic growth kept investors wary.
Energy major Reliance Industries led the gains, climbing 1.7% on bargain hunting. The stock, which has the highest weight on the main index, is still down more than 20% in the year to date.
State-run Oil and Natural Gas Corp dropped 1.4% after its chairman told television channel ET NOW it was in talks with BG Group and Italian oil major ENI to sell up to 30% stake in its gas block off the country’s east coast.
At 11:24am, the 30-share BSE index was up 0.96% at 17,675.12 points, with 25 components advancing, a day after falling more than 2%. The 50-share NSE index was up 1% at 5,310.50.
“It is just a small recovery after the losses,” said Sunder Subramaniam, senior manager of sales at brokerage Sharekhan.
“I don’t think these gains can hold given the pending issues. Nothing has changed,” he said, referring to stubbornly high inflation that has resulted in 10 rate increases over 15 months and slowed economic growth.
Foreign funds have dumped around $410 million of shares in six sessions to 17 June, as the near-term market prospects looked bleak.
The BSE index had slipped to its lowest close in four months on Monday, jolted by speculation India may slap taxes on investments from companies or funds registered in Mauritius, a popular route for portfolio inflows.
India and Mauritius will soon review a three-decade-old taxation treaty, misused by many Indian and multinational companies to avoid paying tax or to route illicit funds, an Indian official and a Mauritius government source said on Monday.
Shares in telecom network services provider GTL and GTL Infra , which had both slumped in the previous session, rose 11.1% and 5% respectively.
On Monday, the stocks had nosedived 62.2% and 42.7% respectively on concerns about debt repayment, pledged shares and fund raising.
Billionaire Anil Ambani-controlled mobile operator Reliance Communications and utility Reliance Infrastructure recouped some of the previous session’s losses and rose 0.9% and 0.6% respectively.
The stocks had tumbled 7.9% and 6.2% respectively on Monday as investors reacted to a decision to drop them from the nation’s benchmark stock index.
Market breadth was positive with gainers beating losers in the ratio of 1.8:1, on volume of 225 million shares.
Leading lenders State Bank of India , ICICI Bank and HDFC Bank gained between 0.4% and 0.8%. The banking sector index was up 0.8% after falling 1.1% on Monday.
Drugmakers Dr. Reddy’s Laboratories and Lupin gained 1% each, after the US FDA said it approved their generic versions of antibiotic levofloxacin, which treats certain infections.