Markets end slightly up; financials lead

Markets end slightly up; financials lead

Mumbai: The BSE Sensex was barely changed on Tuesday after moving in a tight range with investors undecided on the outlook as they awaited a clearer picture of the global economic recovery.

Traders said the US government data on producer prices and housing starts for July later in the day, and the Federal Reserve’s figures on industrial production, would set the near-term trend for the stock market.

"The market is stuck in a range. It is looking for fresh domestic or global factors to move in either direction," said K.K. Mital, head of portfolio management services at Globe Capital.

Lenders mostly edged higher on optimism over loan demand in a growing Indian economy, but rising interest rates was a concern as this could push up costs for manufacturers and tighten their margins.

The 30-share BSE Sensex closed down 0.01%, or 1.93 points, at 18,048.85, with 19 of its components declining. The benchmark moved in a 114-point band through the session. The 50-share NSE index shed 0.1% to 5,414.15.

"We see profit booking at higher levels, while buying emerges at dips. There is no clear trend," Mital said.

The benchmark index has risen 3.3% in the year to date, outperforming its peers in Brazil, China and Russia, thanks to foreign portfolio inflows of $11.6 billion but there is uncertainty of sustaining the buying.

"I think there is a compulsion we are now beginning to start to see people shifting out of India and moving their allocations more in favour of China going forward," Stephen Corry, director and chief investment officer at Merrill Lynch Wealth Management for Asia-Pacificregion told Reuters late on Monday.

Corry said Chinese stocks were better picks because of their relatively better valuations. So far in 2010, Brazil’s Bovespa and China’s Shanghai Composite Index have dropped 2.8% and 18.5% respectively. Russia’s RTS index has gained 1.2%.

Leading private lenders ICICI Bank and Housing Development Finance Corp climbed 1.3%. But top lender State Bank of India shed 0.1%.

ICICI said it was raising its lending rates by 50 basis points from Wednesday, in line with the central bank’s tightening policy. The announcement followed rate increases by market leader State Bank of India.

Energy giant Reliance Industries declined on ongoing worries over the delay in ramp up of gas production. The stock, which has the highest weight on the main index, closed 0.5% lower at Rs971.10.

Shares in Cairn India rose 1.7%, a day after they had fallen 6.4% following Vedanta Resources’ deal to spend up to $9.6 billion for a controlling stake.

Regulatory hurdles could delay the stake purchase, but the buyer and analysts see them as unlikely to derail the deal.

Iron-ore miner Sesa Goa, a unit of Vedanta that also plans to invest in the acquisition, continued to drop and shed 0.9%.

"The proposed acquisition is not synergistic, offers too little stake to Sesa Goa, and does not effectively utilise its cash," Edelweiss said in a note late on Monday.

"Considering these factors and the potential overhang of the acquisition on the stock, we are downgrading our recommendation from hold to reduce."

Mahindra Satyam climbed 2.3% after the outsourcer said a New York court had ruled in its favour in a lawsuit against UK-based Upaid Systems.

In the broader market, gainers and losers were almost equal in number on moderate volume of 461 million shares.


Top-listed biotechnology firm Biocon rose 3.3% to Rs341.50, after the Economic Times reported global drug giant Pfizer was in talks with the Bangalore-based firm to buy a stake or strike a marketing alliance.

State-run refiner Hindustan Petroleum Corp rose 3.2% to Rs497.05 as its chairman told Reuters the company was looking at buying fuel retail assets of Royal Dutch Shell in Africa.

Project lender IFCI climbed nearly 2% to Rs62.15 after its CEO Atul Rai told Reuters on Monday he expects the company’s net assets to grow 22-25% in 2010/11.