MUMBAI (Reuters) – The BSE Sensex gave up most gains to end marginally higher on Tuesday, ahead of derivatives expiry and a crucial GDP data later in the week.
A fall in the rupee, after three sessions of gains, also continued to weigh on shares, traders said.
Technology shares led the gains as investors continued to back companies which have large foreign exchange earnings and stand to gain from a weak rupee.
The rupee cushion for IT companies comes at a time when the $100 billion software and back-office services sector industry is facing unexpected softness in deal signing in key industry segments, citing weak demand from financial services clients in North America and uncertainty in euro zone.
Infosys Ltd (INFY.NS) shares rose 1 percent, while Tata Consultancy Services (TCS.NS) rose 1.3 percent.
Dealers said the market will remain volatile ahead of the May series derivatives expiry on Thursday.
India’s January-March GDP print is also due on Thursday and will be closely watched for possible clues on further rate cuts by the Reserve Bank of India (RBI).
The RBI meets on June 18 for its rate setting meeting, with the GDP data expected to give some clarity on RBI’s likely move.
India’s economy is expected to have grown 6.1 percent in the January-March quarter with the global economic slowdown, government policy paralysis and a record low currency suggesting little chance of a pick up in the current quarter.
“Nifty is expected to remain range bound between 4,900 to 5,100 for next few days as there are fears that GDP data coming on the day of expiry can be below expectations,” said Ajit Surana, Managing Director, Dimensional Securities.
He said that the markets would remain choppy till the Greek elections on June 17 gave some direction on the future of the euro zone.
The BSE Sensex rose 0.13 percent to close at 16,438.58 points, posting a second successive session of gains. It rose 0.8 percent intraday.
The Nifty advanced 0.09 percent to 4,990.10 points.
Auto shares closed higher with Maruti Suzuki (MRTI.NS) rising 2.3 percent, after having fallen 19.6 percent so far in May.
Bajaj Auto (BAJA.NS) and Hero MotoCorp (HROM.NS) rose 0.9 and 0.6 percent up respectively.
Telecom stocks were hurt after investment bank Morgan Stanley downgraded its view on the sector to ‘in-line’ from ‘attractive’, citing increased regulatory risks tied to the spectrum auction, and ‘relatively weaker’ 3G outlook.
Shares in Bharti Airtel (BRTI.NS) were down 0.8 percent.
Idea Cellular (IDEA.NS) and Reliance Communications (RLCM.NS) were also 1.8 and 2.1 percent down respectively.
State-owned oil marketing companies fell for a second day after the government denied any immediate plans to increase diesel and cooking fuel prices, amid demands for a partial roll back of 11 percent hike in petrol prices.
Shares in BPCL (BPCL.NS) fell 2.1 percent, IOC (IOC.NS) was down 2.01 percent and HPCL (HPCL.NS) fell 0.84 percent.
(Additional reporting by Abhishek Vishnoi; Editing by Subhadip Sircar)