Sensex surrenders gains ahead of Fed meeting

Bangalore: Indian shares eked out a 0.16 per cent rise on Tuesday, surrendering gains of more than two per cent in choppy trade as investors reeling from sharp losses cut their bets ahead of a US Federal Reserve meeting.

Analysts said investors had priced in a 100 basis point cut in interest rates by Fed to shield the world's largest economy from further damage from the growing financial crisis, which has hit sentiment around the globe.

State Bank of India fell 2.5 per cent to a five-month closing low of Rs1,592.20, just above the Rs1,590 price of a $4.1 billion rights issue that closed yesterday. Two banking sources told said the issue was expected to be covered on buying from institutional investors.

Infrastructure play Larsen & Toubro rose 2.2 per cent to Rs2,763.95. India's top engineering and construction firm said it had got a $42 million order to supply the world's largest coal gasifier to China.

Scared

"Investors are scared to carry long positions ahead of the Fed meeting," said Ambareesh Baliga, vice-president at Karvy Stock Broking. "People have lost lot of money and they don't want to take chances at higher levels."

The BSE 30-share index closed up 23.97 points at 14,833.46, with 18 components rising, unable to claw back Monday's six per cent plunge.

The index fell as much as 0.9 per cent, before rebounding to be up as much as 2.4 per cent.

The BSE index is down about 27 per cent this year, making it one of the worst performers in Asia. It is about 30 per cent below its record high of 21,206.77 hit on January 10.

"I think the bottom-formation process has started, but it's going to be a very painful process... the worst is far from over," said Arun Kejriwal, strategist at research firm KRIS.

"If you start putting in money at these levels, you won't be too disappointed, but you shouldn't expect miracles as well," Kejriwal said. "We need local cues to turn around which could come from corporate earnings next month."

JM Financial Services said in a report the market had fallen to a level where the risk-reward was in favour of investing, recommending investors to "go long" through mutual funds.

"Overall, the move yesterday can be described as a selling climax, which now means that a bullish reversal is likely," it said.

Reliance Industries, India's top listed firm, fell 1.6 per cent to Rs2,145.35, reversing gains of nearly two per cent earlier. The stock is down 25.5 per cent this year.

Pakistan: Karachi stocks fall

Pakistan's benchmark Karachi Stock Exchange 100 Index fell for the second day, declining 315.34 points, or 2.1 per cent, to 14,728.47 at the 2.15pm local-time close, its biggest decline in 10 weeks.

Pakistan Oilfields Ltd, the nation's third-largest fuels explorer, fell Rs6.15, or 1.7 per cent, to Rs351.80. Pakistan State Oil Ltd, the No 1 fuel retailer, declined Rs15.15, or 2.8 per cent, to Rs523.40, its steepest drop this year.

Oil stocks fell following yesterday's decline in international prices, said Khurram Schezad, research analyst at Investcapital & Securities ltd., in Karachi.

Lucky Cement Ltd, Pakistan's biggest maker of the building material, rose Rs0.45, or 0.3 per cent, to Rs135.15.

Lucky was the sole gainer among the top five active stocks by value, after a report that it had won export certification from South Africa spurred investor interest in the stock, Schezad said.

- Bloomberg