Indian shares rose on Tuesday, led by Reliance Industries and bolstered by strong regional markets, but traders were uncertain about the sustainability of the gains amid rising inflation and high oil prices.
Reliance Communications added 1.4 percent to 550.75 rupees, rebounding from a 5.1 percent fall on Monday triggered by news that it and South Africa’s MTN Group had started talks that could create a $66 billion telecoms group.
Traders said the gains reflected hopes that Reliance Communications could engineer a deal that did not excessively stretch its balance sheet.Shares in Reliance Industries, India’s top listed firm, rose 0.6 percent to 2,539.70 rupees as traders saw a buying opportunity after the stock had fallen more than 5 percent in the past three days.
At 11:27 a.m. (0557 GMT), the 30-share BSE index was up 0.33 percent, or 54.15 points, at 16,402.65, with 20 components gaining, having risen nearly 1 percent earlier.
The index is down more than 19 percent in 2008.
"There is a lack of conviction in the market," said D.D. Sharma, vice president at Anand Rathi Securities in Mumbai. "It is still not clear how the authorities will manage inflation and high crude prices."Annual inflation topped 8 percent in March for the first time in 3-½ years, revised data showed on Friday, and analysts said a possible rise in government-set retail fuel prices could push it closer to double digits.
The Indian government will soon take a decision on an oil ministry proposal to raise petrol and fuel prices, a senior official said on Tuesday without elaborating.JM Financial Services said in a technical research report that a pullback of 200 to 500 points was likely in the main index over the next few days after the recent market sell-off.
Tata Consultancy Services Ltd rose 0.4 percent to 963 rupees after India’s top software services exporter said it had signed a five-year deal worth $100 million with privately held European firm NXP Semiconductors. Larsen & Toubro was up 0.9 percent at 2,775 rupees on bargain hunting after the stock fell 8.2 percent in the last three days. India’s top engineering and construction firm is due to report results on Thursday.
In the broader market, 1,470 gainers defeated 802 losers on volume of more than 90 million shares.
The broader 50-share NSE index was up 0.69 percent at 4,908.80.
Elsewhere in the region, Karachi’s 100-share index declined 1.71 percent to 12,369.70, while Colombo’s All-share index was down 0.18 percent at 2,567.42 points.
STOCKS ON THE MOVE
* Omaxe was up 2.7 percent at 216.30 rupees after the real estate firm said it was talking to merchant bankers in India and abroad to raise at least $500 million through an equity placement.
* Sita Shree Food Products Ltd rose 4.9 percent to 44.35 rupees on news the company had won orders from Reliance Fresh for 400 metric tonnes of wheat flour and pulses, higher than a previous order for 160 metric tonnes.
MAIN TOP 3 BY VOLUME
* Ispat Industries Ltd on 5 million shares
* Reliance Natural Resources Ltd on 4 million shares
* IFCI Ltd on 3 million shares
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