Mumbai: Indian shares barely held ground on Thursday as weak US data hit markets worldwide, but Bharti rallied as fears of an earnings impact from its proposed $24 billion merger with South Africa’s MTN were removed after the deal collapsed.
The main index ended the holiday-shortened week up 2.6%, with Thursday’s close its highest in more than 16 months.
Energy giant Reliance Industries, engineering and construction firm Larsen & Toubro and top mortgage firm Housing Development Finance Corp weighed on the main index.
“If the market consolidates at these levels, it will be healthy,” Tjas Doshi, head of research at Sushil Finance, said. “Among the large caps, there’re not many stocks that look inexpensive at the moment.”
Mobile operator Bharti Airtel jumped as much as 11.6% after its talks with MTN failed on Wednesday for the second time in just over a year on South Africa’s reluctance to allow a flagship corporate to lose its national character.
The stock later pared gains to end up 4% at Rs435.35, its best close in almost 2 weeks. “We expect a relief rally in Bharti stock in the short term, which we would use as an opportunity to partly book profits,” Anand Rathi Financial Services analysts wrote in a note.
The 30-share BSE index .BSESN ended up 0.05%, or 7.71 points, at 17,134.55, its highest close since 21 May, 2008. Seventeen stocks advanced, with the benchmark rising as much as 0.4% and falling 0.4% during trade. The 50-share NSE index was flat at 5,083.40.
The market was closed on Monday for a public holiday, and will be shut on Friday to mark Mahatma Gandhi’s birth anniversary.
“The market is a bit stretched at present and there is some consolidation, but it is healthy as the market will get a stronger base,” Sonam Udasi, vice president at Brics Securities, said.
The broader market was weighed down by a surprise drop in manufacturing in the US heartland that raised concerns about the strength of a global recovery and pushed Asian stocks lower.
The BSE index has more than doubled from a 2009 low in early March and is up 77.6% this year, boosted by foreign portfolio inflows of more than $12 billion in the period, including $3.8 billion in 1-29 September.
But some analysts worry valuations are expensive and may temper future gains. Subdued monsoon rains - crucial to the domestic-demand-led economy - may also crimp corporate earnings growth.
India’s factory output rose in September and inflation accelerated on robust domestic demand, a trend analysts said could prompt the central bank to tighten policy early next year.
The main index is likely to rise more than 2% by the end of 2009, a Reuters poll showed.
Reliance, which has the most weight in the main index, shed 1.4% to Rs2,170.45. Housing Development Finance Corp eased 2.8% to Rs2,699.15, while Larsen dropped 1.1% to Rs1,665.45.
In the broader market, losers led gainers 1,679 to 1,157 on relatively heavy volume of 606.8 million shares.
Asian shares were lower, with Japan’s Nikkei falling 1.5%, while MSCI’s measure of other Asian markets dropped 0.5%. At 4:18pm, the FTSEurofirst 300 index of top European shares was down 0.3%.