Indian shares ended off their day's highs on Friday, as a fall in European markets after a rally the day before and domestic concerns on whether the government will speed up economic reforms prompted investors to take some intra-day profits off the table at higher levels.
The rally may not last long and stocks may drift lower in coming sessions, if the government fails to deliver on key reforms like the opening of FDI in multi-brand retail and fuel-price deregulation, analysts said.
The 30-share BSE Sensex moved closer to the 17,000 mark in the afternoon session before paring gains to end up about 200 points or 1.2 percent at 16,839, with 24 of its components advancing. Metal, FMCG, IT and auto stocks paced the gainers, while realty, capital goods and healthcare stocks ended on a subdued note.
The broader Nifty index rose by 57 points or 1.13 percent to 5,100, while the BSE mid-cap and small-cap indexes ended down about a percent each.
ICICI Bank rose 2.4 percent as the nation's biggest private sector lender beat estimates with a 36 percent rise in first-quarter net profit. Rival HDFC Bank climbed 3.1 percent, while public sector lender SBI slumped 3.8 percent after raising $1.25 billion via an overseas bond issue.
PNB plunged 5.3 percent as it posted a 13 percent rise in quarterly profit, in line with estimates despite higher provisioning for bad loans. Union Bank of India tumbled 3.7 percent on reporting a modest 10 percent rise in first-quarter net profit.
Metal stocks led the gainers after base metals closed mostly higher overnight, supported by a pledge from the ECB to do whatever it takes to protect the euro. Tata Steel, Sterlite, Hindalco, Sesa Goa and Hindustan Zinc rose 2-4 percent.
TCS, India's larges software services exporter, rallied 1.9 percent, rival Infosys gained 1.1 percent and Wipro ended up 1.3 percent after Indian Ambassador to the U.S., Nirupama Rao said Indian IT companies supported 2,80,000 jobs in the U.S. last year.
In the FMCG sector, ITC closed up 2 percent as it unveiled plans to invest Rs 25,000 crore over the next 5-7 years in various projects. Hindustan Unilever rose 0.6 percent, Dabur India gained 1.2 percent, and Godrej Consumer Products jumped 4.8 percent.
NTPC added a percent as the firm reported a higher-than-expected 20 percent rise in quarterly net profit. Shares of private sector power producer Tata Power gained 1.2 percent. ACC rose about 3 percent and Ambuja Cements closed 0.7 percent higher after the cement majors reported a sharp increase in their profitability for the April-June quarter.
Retailers Pantaloon tumbled 2.6 percent, Shoppers Stop fell 3.4 percent and Trent lost 2.3 percent after Commerce Minister Anand Sharma said the government would soon take a "political call" on the contentious issue of allowing foreign direct investment in multi-brand retail .
Sugar stocks like Dhampur Sugar and Shree Renuka fell 5-6 percent on a PTI report that the government may reduce the quantity of sugar that mills contribute for supply through ration shops in 2012-13 after assessing the production situation.
Sun TV Network plummeted 11.2 percent on reports of a possible CBI chargesheet against the company's executive chairman Kalanidhi Maran, and his brother, former telecoms minister Dayanidhi Maran in Aircel-Maxis deal case. Wockhardt fell 2.9 percent after divesting its nutrition business in favor of Danone.
Elsewhere, stocks ended mostly higher across Asia, with key benchmark indexes in Hong Kong, South Korea and Taiwan climbing more than 2 percent each, as speculation increased that central banks will announce additional steps to spur global growth.
European Central Bank chief Mario Draghi vowed unconditional support for the beleaguered euro, boosting speculation that the central bank may unveil some concrete plans when its rate-setting governing council meets on August 2.
Also, despite a lack of specifics in the minutes of the most recent Fed meeting, investors still remain hopeful and betting on further easing from the U.S. Federal Reserve as it holds a two-day policy meeting starting July 31.
European stocks were mixed following the previous session's rally, as caution prevailed ahead of important U.S. second-quarter GDP data.
by RTT Staff Writer
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