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MUMBAI -- Indian shares ended higher for a second straight day Thursday, driven by strong opening gains in European bourses and hopes India's central bank will focus more on stimulating growth as inflation eases further.
Shares recovered from early losses as investors welcomed news of the European Central Bank lending €489.19 billion in low-interest loans to 523 banks in the region. The move lends short-term respite to the debt-stricken euro zone.
The Bombay Stock Exchange's Sensitive Index rose 0.8% to end at 15,813.36 after trading between 15,472.70 and 15,834.63.
On the National Stock Exchange, the 50-stock S&P CNX Nifty gained 0.9% to close at 4,733.85.
Trading volume in the BSE's cash segment was little-changed at 19.71 billion rupees from Wednesday's 19.13 billion rupees. Gainers outnumbered decliners 1,547 to 1,149, while 147 stocks were unchanged.
India's food inflation rate rose at its slowest pace in nearly four years, at 1.81% in the week to Dec. 10 compared with 4.35% in the week before.
India's headline inflation number, presently hovering around 9%, may drop to 7.5%-8% by March 2012, said Ramanathan K, chief investment officer at ING Investment Management India in a note.
This may lead to the Reserve Bank of India relaxing its monetary policy to drive growth, it added.
The bank index advanced 2%, extending Wednesday's 5.3% rally.
However, disappointing corporate earnings, which have been the key driver of the Sensex fall, present a downside risk. "We expect market recovery to be back-ended and should see the Sensex inching up only by latter half of the next year," Mr. Ramanathan said.
ICICI Bank led gains with a 3.5% gain to 727.10 rupees.
Energy major Reliance Industries was up 1.0% to 754.75 rupees.
Hindustan Unilever rose 1.9% to 408.75 rupees. The stock touched a 52-week high early in the session as a result of defensive buying.
The IT index slipped 1.5% due to concerns of a potential slowdown in demand for outsourcing services after Oracle posted its first miss in quarterly results since November 2008. Sector leader Infosys fell 1.1% to 2,714.80 rupees.
Bharti Airtel fell 1.8% to 335.45 rupees after the government said pacts between operations to offer third-generation mobile roaming services are illegal.
source: http://online.wsj.com
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