BSE Sensex Inches Higher; RIL, Metals Fall

 @WRorrky on January 23 2012 8:52 AM

The BSE Sensex rose for a third straight session, inching up 0.08 percent on Monday, helped by financials while a decline in Reliance Industries (RELI.NS), which reported its first quarterly profit fall in two years, capped the index gains.

Financials rose a day ahead of the Reserve Bank of India's monetary policy review, on hopes the central bank may signal an easing monetary policy stance to support growth in Asia's third-largest economy.

Buying interest was seen in much-beaten-down consumer goods shares and telecoms major Bharti Airtel (BRTI.NS).

The 30-share BSE index rose 0.08 percent or 12.72 points to 16,751.73 points, its highest close since December 7. The index moved in a narrow range with trading remaining choppy. Eighteen of its components closed higher.

There is some interest in stocks that have underperformed in recent months, but most of the action is happening in the mid-cap space, said Ambareesh Baliga, chief operating officer, Way2Wealth Securities.

The expectations of a rate cut seem to be priced in. Still there is hope, he added.

Economists polled by Reuters said the RBI would not cut interest rates in Tuesday's review, but they nearly unanimously expected the central bank to do so by the end of June.

Shares in banks, which have seen credit growth slow because of higher interest rates, ended up. The country's largest lender State Bank of India (SBI.NS) rose 0.4 percent, while private sector rival ICICI Bank (ICBK.NS) gained 1.7 percent.

Gains in the index were limited by a 2.7 percent fall in Reliance. The energy major's December-quarter profit fell 14 percent from a year ago, the company reported late on Friday.

The decline in the shares of the company, which also announced a $2.1 billion share buyback to boost sentiment for the stock, was their biggest single-day loss in more than three weeks.

We believe margins in each core business will remain under pressure over the next few years, brokerage IDFC said in a client note, while downgrading the stock to neutral.

While the buyback announced with the results is a positive, we believe it will take more than that to shore up the stock given limited positive triggers, it said in the note on Monday.

Larsen & Toubro (LART.NS), India's largest engineering and construction firm, pared losses to close 0.2 percent higher after it beat market estimates to post an 18 percent rise in quarterly profit, helped by higher income.

The company maintained its order inflow guidance for the current fiscal year at 5 percent, but said its overall margins could slip because of tough business conditions.

Leading carmaker Maruti Suzuki (MRTI.NS), which reported a 64 percent fall in quarterly net profit, ended 5.2 percent higher, after its Chairman R.C. Bhargava said the worst is over for the company and its March quarter will definitely be better.

Maruti lost $500 million in production due to labour strikes that shut down its factories for weeks last year amid an overall slowdown in sales.

Ferrous metals producer Sterlite Industries (STRL.NS) extended losses to close down 5.4 percent after it posted worse-than-expected 17 percent drop in quarterly profit, weighed down by weaker prices and higher costs.

The weak sentiment also impacted rivals Hindalco (HALC.NS) and steelmaker Tata Steel (TISC.NS), which fell 4.3 percent and 2.3 percent respectively.

In the broader market, 738 declines narrowly outpaced 710 gainers on moderate volume of 629 million shares.

The 50-share NSE index closed down 0.05 percent at 5,046.25 points.

STOCKS THAT MOVED

* Godrej Consumer Products Ltd (GOCP.NS) rose 4.1 percent to 419.20 rupees after it posted a 40 percent jump in quarterly profit and Singapore's Temasek TEM.UL said it would invest $136 million in the Indian company.

* JSW Steel (JSTL.NS) fell 2.4 percent to 631.40 rupees after India's No. 3 steel maker reported quarterly profit fell by a bigger-than-expected 56 percent, and said shortage of iron ore supplies continues to be a major concern.

* Oberoi Realty (OEBO.NS) fell 2.7 percent to 243.05 rupees after the real estate developer reported a 50 percent drop in December quarter net profit.

TOP THREE BY VOLUME

* Suzlon Energy (SUZL.NS) on 49.7 million shares

* IFCI (IFCI.NS) on 21 million shares

* IVRCL (IVRC.NS) on 18.8 million shares.

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