The BSE Sensex shrugged off a sluggish start and climbed for a second day on Tuesday, powered by energy major Reliance Industries and software services bellwether Infosys Technologies.
A revival in buying by foreign institutional investors (FIIs) this month spurred demand for stocks that had fallen recently, but worries about the outlook remain with more rate increases in the offing to stem high inflation, traders said.
Engineering and construction conglomerate Larsen & Toubro and consumer goods leader Hindustan Unilever, stocks that had gained recently, were dumped.
The 30-share BSE index rose 0.41 percent, or 75.51 points, to 18,495.62, with 18 of its components gaining ground.
Foreign funds have bought $307 million of shares in June after pulling out $1.16 billion in May.
Reliance Industries, which has the heaviest weight on the index, rose 2.2 percent to 958.25 rupees as investors bought the beaten-down stock.
Worries about decline in gas output from Reliance's blocks off India's east coast have dragged down shares of the most valuable firm 9.5 percent this year.
Infosys climbed 1.9 percent, leading a rebound in export-focused software services that dropped recently on worries about the pace of recovery in the United States, the biggest market for these companies.
Bigger rival Tata Consultancy Services Ltd added 1.3 percent, while No. 3 Wipro Ltd shed 1 percent.
Traders said investors were churning their portfolios and the outlook was still uncertain.
A government panel is expected to take a decision on Thursday to raise state-controlled diesel and cooking gas prices, a move that will accelerate inflation.
The RBI, which has said fighting price pressures was its priority even if that meant denting growth, is widely expected to raise key rates by at least 25 basis points on June 16. It would be the 10th increase since mid-March 2010.
Data released last week had showed January to March growth in India was the slowest in five quarters.
Leading car maker Maruti Suzuki reversed early losses and ended up 0.65 percent. Workers at its plant in Haryana have been on strike since Saturday, disrupting production and the stock had fallen as much as 1.7 percent early on Tuesday.
Larsen ended 1.3 percent lower at 1,705.60 rupees while Hindustan Unilever shed nearly 2 percent at 308.75 rupees.
The 50-share NSE index was up 0.4 percent at 5,556.15 points.
Around 464 million shares changed hands on the NSE, with gainers beating losers in the ratio of 1.4 to 1.
The U.S. dollar fell broadly on Tuesday after a Chinese official said the greenback could weaken further against other major currencies while European equities rebounded as investors picked up beaten-down shares.
By 1101 GMT, the MSCI world equity index was up 0.2 percent, while the Thomson Reuters global stock index added 0.3 percent.
STOCKS THAT MOVED
* Karnataka Bank surged nearly 11 percent on market talk the private-sector lender planned to sell stake, several dealers said. The bank's managing director and chief executive, Jayarama Bhat, denied the rumour and the shares trimmed gains to 6.1 percent at 120.85 rupees by close.
* Nucleus Software Exports gained 2.5 percent to 85.15 rupees after the software firm said it had finalised a partnership with Turkey's Gantek to expand its presence in that country.
* ARSS Infrastructure Projects ended 2.3 percent higher at 457.20 rupees after it won 2.07-billion-rupee orders from Madhya Pradesh road development corporation for construction of road.
TOP THREE MAIN STOCKS BY VOLUME ON NSE
* Unitech on 20.3 million
* Sun TV on 10.2 million
* Karnataka Bank on 10.1 million
Source: in.reuters.com
Ravi Jhawar
Summer Intern-Technical Analyst
DENIP Consultants Pvt. Ltd.
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