Mumbai: Indian shares extended gains to more than 1% in early afternoon trade on Wednesday, recovering from morning losses of as much as 1.7% as they tracked strong Asian markets
A survey showed Indian manufacturing activity contracted for a fifth straight month in March as demand remained depressed by the global economic downturn, although there were some signs of improvement.
India will only see piecemeal pro-market reforms after the month-long general election that starts in mid-April, a Reuters poll of 14 leading analysts has predicted.
An alliance led by the ruling Congress party has lost ground over the last week amid coalition squabbles and may need leftist support to win office, the analysts added.
By 12:20pm, the 30-share BSE index was up 118.24 points at 9,826.74 and the 50-share NSE Nifty has touched the 3,000 mark again at 3045.75, 24.80 points higher.
Top telecoms firm Bharti Airtel, diversified cigarette maker ITC and energy giant Reliance Industries led the losses.
“This is a return to reality. More than the upcoming quarterly results, it is the larger macroeconomic factors that will weigh down the market,” T S Harihar, senior vice president at ICICI Securities, said.
The BSE index had gained 9.2% in March, its best performance since last April, and helped post a quarterly gain for the first time since the last quarter of 2007.
However, economic and political concerns remain.
India’s current account deficit leapt to its highest in 18 years in the December quarter as the global crisis choked inflows, while the fiscal deficit for the first 11 months of 2008/09 reached 94% of an upwardly revised full-year forecast after the government went on a spending spree to stimulate a slowing economy.
“Yesterday, no one was willing to sell as it was the end of the quarter. But the fiscal deficit and current deficit are big problems,” Harihar said.
Reliance Industries, which has the biggest weight in the main index, fell 0.7% to Rs1,512.60. Bharti dropped 3.5% to Rs604, while ITC slid 2.2% to Rs180.70.
Asian shares were mixed with Japan’s Nikkei up 2%, while MSCI’s measure of other Asian markets was flat.