The BSE Sensex snapped a three-day slide and eked out a modest rise on Thursday,helped by hopes for an interest rate cut but a gloomy outlook for the domestic and world economy kept investors from building large positions.
Outsourcers such as Infosys Technologies,which get more than half their revenue from exports,led the gains following a more than 2 per cent fall in the rupee’s value against the dollar this week.
The main BSE stock index closed 0.3 per cent,or 27.45 points,higher at 9,042.63,after falling 6.4 per cent over the previous three days. It initially rose 1.1 per cent but ran out steam.
“Current valuations have discounted almost all negatives,” said Deven Choksey,CEO and managing director of K.R. Choksey. But a small rise triggers selling,underscoring the market’s soft underbelly.
Bellwether Infosys,India’s No. 2 software exporter,rose 2.5 per cent to 1,208.20 rupees and smaller rival Wipro climbed 5.4 per cent to 220.35 rupees as a stronger dollar was seen boosting their revenue in rupees.
The rupee has fallen 2.2 per cent this week to around 49.75 rupees against the dollar.
Financial stocks ended mixed after an early rise petered out as concerns about rising pressure on the net interest margin of banks remained.
Top lender State Bank of India dropped 1.1 per cent to 1,059.55 rupees and rival ICICI Bank fell 2.1 per cent to 361.50 rupees.
The sector index initially rose 1.9 per cent but ended down 0.6 per cent,taking losses over four days to 11.4 per cent.
But mortgage lender Housing Development Finance Corp gained 2.1 per cent to 1,392.65 rupees and HDFC Bank firmed 0.9 per cent to 884.80 rupees.
Traders said a drop in annual inflation,below 4 per cent for the first time since 2007,failed to excite the market although it bolstered prospects for a rate cut.
“Inflation numbers are in line with expectations and there is no surprise left there as it is expected to fall further due to a high base effect,” said D.K. Joshi,principal economist at rating agency at CRISIL.
Inflation was at 3.92 per cent in the 12 months to Feb. 7,the lowest since Dec. 29,2007 and slightly below 4.01 per cent forecast in a Reuters poll.
The Reserve Bank of India governor said on Wed nesday there was room to cut interest rates but the question was when and whether it should do so,and by how much.
Eighteen of the BSE index’s 30 components rose,but in the broader market losers led gainers in the ratio of 1.2:1 on relatively moderate volume of 215 million shares.
The 50-share NSE Nifty index closed 0.48 per cent up at 2,789.35.