Mumbai: Shares edged 0.2% higher on Wednesday, but trading was choppy as investors were cautious after the market had climbed 4.6% over the previous three days.
Tata Steel reversed early losses and climbed more than 3% as analysts focused on the outlook after the world’s No. 7 steelmaker more than doubled its quarterly profit, driven by demand and pricing in Europe and robust growth at its Indian operations.
But the company lagged estimates as higher raw material costs squeezed margins.
“Indian operations continued to deliver strong performance, with higher-than-expected sequential improvement in EBITDA margins,” Goldman Sachs said in a note reiterating its buy rating on the stock.
“For Corus, the sequential decline in margins was lower than we expected, which reaffirms our thesis that the Europe operations are in a better operating position to weather adverse industry dynamics,” it added.
By 10:20am, the 30-share BSE index was trading up 0.22% at 18,313.61 points, with half of its components gaining. The 50-share NSE index or Nifty was up 0.1% at 5,488.45.
In the broader market, gainers were almost double the number of losers on volume of 62 million shares.
However, dwindling foreign institutional investors (FIIs) fund investment kept the sentiment cautious. Foreigners have sold a net of $1.7 billion of shares year-to-date, dragging the main index down 10.7%.
“In the last three days of gains, there was not much buying interest from FIIs. This is a disturbing fact,” said Mehul Dedhia, assistant vice-president of sales at brokerage Sharekhan.
“The upside from here looks capped. There is resistance seen at Nifty level 5,500-5,550,” he added.
Investors would be watching Prime Minister Manmahon Singh’s rare news conference at around 11:00am.
Jindal Steel & Power rose 2.2% after it received conditional approval from the environment ministry to build a 6 million tonnes steel plant in eastern Orissa.
Unitech slipped as much as 2.7% after Indian police on Tuesday questioned a top executive of the real estate developer as part of a probe into a telecoms corruption scandal that has roiled politics.
Hexaware jumped 6.3% at Rs 114.15 after the software services firm reported a better-than-expected 10% rise in Oct-Dec net profit and forecast 2011 revenue to grow by a quarter.
EIH Ltd was up 1.9% at Rs 103.75 after the hotel chain said its board had raised rights issue price and the issue size.