Markets edge higher; more volatility seen ahead

Sensex gains 0.18% to 18,610.77 points, while Nifty rises 0.22% to 5,660.25 points

Mumbai: Indian shares edged higher on Wednesday as recently-hit stocks such as Infosys Ltd recovered, while Cairn India Ltd and Housing Development Finance Corp. Ltd (HDFC) rose on market talk index provider MSCI will increase the weighting of the two by its November review.

However sentiment remained largely cautious with the recent period of volatility expected to continue as more companies line up to report their earnings, including ACC Ltd and Ambuja Cements Ltd on Thursday.

Corporate earnings and the Reserve Bank of India’s policy review on 30 October are seen as the next big triggers for markets, given continued concerns about the outlook for economic growth and the continued threat of sovereign rating downgrades. “Given the recent rally and most participants expecting gross domestic product growth of 5.5-6%, what market needs is earnings support,” said Aneesh Srivastava, chief investment officer at IDBI Federal Life Insurance Co.

“But the way the political environment and interest rates are today, it will be difficult for markets to substantially move ahead,” he added.

India’s BSE index, Sensex, rose 0.18%, or 33.07 points, to 18,610.77 points. The 50-share NSE index, Nifty, rose 0.22%, or 12.25 points, to 5,660.25 points.

Recently battered shares recovered on Wednesday. Infosys rose 0.6% after shares had fallen 7% in the previous three sessions after the technology services provider disappointed investors with its earnings outlook. Larsen and Toubro Ltd gained 1.51% after falling 2.9% in the previous three sessions.

Also gaining on Wednesday, HDFC rose 1.2% while Cairn India Ltd gained 1.8%. A source at MSCI told Reuters the weighting of both stocks are expected to change by later this year, attributing the reasons to recent block deals and private placements by the two companies.

Carlyle Group raised $841 million by selling its remaining 3.7% stake in HDFC, while Cairn Energy Plc. raised about $922 million by selling an 8% stake in Cairn India.

Drug maker Lupin Ltd rose 2.92% after receiving US Food and Drug Administration approval for generic Avapro tablets for treating hypertension.

However, cement makers ACC fell 1.25%, while Ambuja Cements dropped 3% after TV news channel ET Now reported the companies may provide a 2% royalty on sales to parent company Holcim Ltd, citing unnamed sources.

ACC declined to comment on the report, while Ambuja did not respond to questions from Reuters. The two companies are set to post earnings results on Thursday.

Reliance Industries Ltd fell 0.9% on expectations the energy conglomerate will not be able to sustain a rebound in refining margins in the July-September quarter, and on concerns about valuations after a recent rally.

HCL Technologies Ltd fell 0.7%, retreating from a 12-year high hit earlier in the session after posting a 78% jump in quarterly profit. JSW Steel Ltd fell 2.8% after India’s federal police agency named senior company officials among the accused in a case related to illegal iron ore mining in the southern state of Karnataka. JSW called the charges “without basis.”

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