Indian shares rebounded sharply from two days of losses on Thursday, as a steep hike in petrol prices fueled speculation that the government may hike diesel and LPG prices on Friday to cut the fuel subsidy bill and counter the perception of government inaction that has lowered the credibility of the UPA government among overseas investors.
The rupee pulled back after hitting a new record low of 56.38 against the dollar in morning trading, helping benchmark indexes close near their day's highs. The benchmark 30-share Sensex ended up 274 points or 1.72 percent at 16,222, while the broader Nifty index rose by 86 points or 1.77 percent to 4,921.
Banking, oil/gas and technology stocks led the rebound, while FMCG, consumer durable and healthcae stocks ended little changed.
In the financial sector, lenders SBI, Canara Bank, PNB, ICICI Bank, HDFC Bank, Axis Bank and Bank of Baroda rose between 0.7 percent and 5 percent. Shares of HDFC, India's largest mortgage lender, jumped 4.4 percent on reports that MSCI is reviewing its decision to cut the company's weightage in the MSCI India index.
An early rally in oil retailers lost steam after reports said the government is considering a partial rollback of the petrol price hike effected last night. Gail, BPCL, Oil India and ONGC rose between 0.4 percent and 5.7 percent, while IOC shed 0.9 percent and HPCL lost 1.2 percent.
Automakers ended mixed, with Bajaj Auto and Tata Motors rising 1-2 percent, while Hero MotoCorp slipped 0.2 percent and Maruti Suzuki eased half a percent. Metal stocks like Sterlite, Hindalco and Jindal Steel gained 1-3 percent even as fresh data showed weak growth in China and Europe.
Telecom major Bharti Airtel rebounded 5.6 percent after the previous session's sell-off, software services exporters like Infosys and Wipro added 1-2 percent and energy giant Reliance Industries gained 1.4 percent.
Reliance Power soared 3.7 percent after the Anil Ambani-promoted company reported a 24 percent rise in fourth-quarter consolidated net profit, beating estimates. Tech Mahindra soared 8.8 percent on forecast-beating FY12 earnings results and shares of group company Mahindra Satyam also jumped 7.8 percent on the back of huge volumes.
Elsewhere across Asia, stocks ended on a mixed note, after the informal EU summit ended with no concrete plans to address the region's debt crisis and a preliminary reading for a purchasing managers' index indicated China's manufacturing sector shrank for a seventh straight month in May, reflecting the deteriorating export situation.
Gains lacked conviction as European leaders failed to produce a breakthrough in the eurozone crisis, with divisions further widening over proposals such as the creation of common Eurobonds.
However, European stocks traded firm after an early session slide despite the release of disappointing economic data on German business confidence and U.K. GDP.
by RTT Staff Writer
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