NEW DELHI |
(Reuters) - The BSE Sensex was on track for their first weekly gain in five even as investors turned cautious on Friday after a two-day rally, with slowing domestic growth and uncertain outlook for foreign fund inflows still a concern.
Lenders extended gains from the previous session, while energy majorReliance Industries (RELI.NS) and top engineering firm Larsen & Toubro (LART.NS) were among the top losers on profit-taking after a two-day rally.
By 12:03 p.m. (0633 GMT), the benchmark 30-share BSE index .BSESNwas up 0.34 percent at 16,538.84, although 13 of its components were in the red. It had fallen as much as 0.3 percent earlier.
The index had risen 3 percent in the past two sessions, climbing to its best close in two weeks on Thursday.
"Some cooling off is happening after the rally yesterday, which is what happened in other markets as well," said K.K. Mital, head of portfolio management at Globe Capital.
"People are watching the European situation. Some ray of hope is there from the December 9 meeting," he said, referring to a key European summit next week to tackle the euro-zone crisis. "Local factors are also influencing decisions."
The main index fell 8.9 percent in November and is down nearly a fifth in the year to date to be among the world's worst-performing equity markets, hit by high inflation, rising interest rates and slowing economic growth.
Finance Minister Pranab Mukherjee said on Friday foreign direct investments had risen this year, but there were concerns about outflow of portfolio investments.
There are also worries about the scandal-hit government's ability to push through crucial economic reforms.
Foreign funds have been net sellers of more than $500 million of Indian shares this year, compared with record buying of more than $29 billion in 2010. A revival in foreign fund inflows next year would be key for the market's growth and that remains uncertain with the European crisis yet to be resolved.
A Reuters poll this week showed the main stock index could rise almost 17 percent by the end of 2012 to 19,250 points, as investors bet on a possible cooling off in inflation and a reversal in the interest rate tightening cycle as the economy slows.
Citigroup said in a note on Friday "structural snags" in the form of inflation and economic slowdown remain for the Indian markets but valuations had turned "relatively attractive".
"We expect positive market movements to be more upfront than back-ended," Citigroup analysts wrote in their 2012 India equity strategy note.
The U.S. bank, which sees benchmark BSE index at 18,400 points by next December, is overweight on banks and autos, relatively defensive on telecom and pharmaceutical sectors, and underweight on materials, information technology, utilities and consumer stocks.
Leading private sector lenders ICICI Bank (ICBK.NS) and HDFC bank (HDBK.NS) rose about 1 percent each, extending Thursday's gains.
Reliance Industries, India's most-valuable firm and the heaviest stock in the main index, was down 1.1 percent at 790.55 rupees. Bank of America Merrill Lynch downgraded to stock to 'neutral' from 'buy' and cut its target price to 860 rupees from 950 rupees, citing weak outlook on refining margins.
Reliance shares are down more than a quarter on the year, underperforming the broader market, on worries over slowing gas output at one of its key fields.
Top engineering firm Larsen & Toubro (LART.NS) fell 0.9 percent to 1,283.50 rupees, after gaining 1.8 percent in the previous session.
Ranbaxy Laboratories (RANB.NS), India's top drugmaker by sales, was trading down about 1 percent. The shares had jumped on Thursday after the company received nod of the U.S. Food and Drug Administration to launch a generic version of Pfizer Inc's (PFE.N) blockbuster Lipitor.
Hero MotoCorp (HROM.NS) eased 0.6 percent to 2,076.20 rupees, after rising 4.4 percent on Thursday. The leading Indian motorcycle maker reported a 27 percent rise in two-wheeler sales for November after market hours on Thursday.
In the broader market, there were 784 gainers for 558 losers on volume of about 187 million shares.
The 50-share NSE index .NSEI was up 0.41 percent at 4,957.20.
Asian stocks paused on Friday, a day after posting their biggest single-day rise in two months, but were poised for their first weekly rise in a month buouyed by coordinated central bank actions.
STOCKS ON THE MOVE
* Kingfisher Airlines (KING.NS) was down 2.9 percent at 23.15 rupees. A source said Mumbai International Airport Pvt Ltd on Thursday sent a legal notice to the struggling carrier, threatening to put it on cash and carry from Saturday citing non-payment of dues.
* Cable television service providers Hathway Cables (HAWY.NS) and Den Networks (DENN.NS) rose 6.2 percent and 3 percent, respectively, after a newspaper report the government could increase foreign direct investment limit in the distribution platforms to 74 percent from 49 percent currently.
TOP THREE BY VOLUME
* Tata Motors (TAMO.NS) on 4.8 million shares
* Unitech (UNTE.NS) on 4.7 million shares
* Suzlon Energy (SUZL.NS) on 4.6 million shares
(Reporting by Devidutta Tripathy; Editing by Ranjit Gangadharan)
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