Stocks start new fiscal year with 2 pct rise

Trading is expected to be choppy ahead of month-long general elections that begin in mid-April amid worries about the slowing economy.

Indian manufacturing activity contracted for a fifth straight month in March and exports fell in February as the global economic downturn depressed demand and the outlook remains clouded by uncertainties.

The 30-share BSE index closed up 1.99 per cent,or 193.49 points,at 9,901.99,after falling as much as 1.7 per cent at one stage.

The benchmark had risen 9.2 per cent in March,its best performance since last April,helping it post a quarterly gain for the first time since the last quarter of 2007. It fell 26 per cent in 2008/09 fiscal year.

Twenty of its components advanced,while in the broader section gainers outstripped losers in the ratio of more than 3:1 on moderate volume of 344.5 million shares.

8220;Investors are unwilling to go short,but are not taking too many long positions either,8221; R. Sriram,a technical analyst at ICICI Securities,said.

He said the coming elections would keep investors wary.

India will only see piecemeal pro-market reforms after the general election,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.

8220;We see some profit booking in some stocks,but it8217;s not like before where investors were completely exiting their holdings,8221; Sriram said.

However,economic worries remain.

India8217;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 per cent of an upwardly revised full-year forecast after the government went on a spending spree to stimulate a slowing economy.

The government plans to sell 2.41 trillion rupees 47.5 billion of bonds,two-thirds of its annual target,in the first half of 2009/10,raising fears in an already nervous market that funding needs may be bigger than expected.

Reliance Industries,which has the biggest weight in the main index,rose 3.7 per cent to 1,579.45 rupees,while HDFC gained 6.7 per cent to 1,505.80 rupees. No. 2 software-services exporter Infosys Technologies firmed 3.9 per cent to 1,375.50 rupees.

Automaker Mahindra amp; Mahindra climbed almost 3 per cent to 394.60 rupees,after the company said its March sales rose 6 per cent.

Bharti dropped 1.7 per cent to 615.05 rupees,while state-run power equipment firm BHEL slid 2.2 per cent to 1,472.05 rupees.

The 50-share NSE index rose 1.3 per cent to 3,060.65.

Japan8217;s Nikkei surged 3 per cent but other Asian stocks started the quarter more cautiously as reports of an orderly bankruptcy for General Motors supported sentiment.