Indian shares rebound as inflation fears ease

Mumbai: Indian shares rebounded from an early slide on Tuesday and rose 0.2 per cent after a drop in oil prices and short-covering ahead of monthly derivatives expiry on Wednesday.

Financial stocks led the market higher as easing oil prices calmed inflation expectations and the outlook for interest rates, traders said.

Private sector lender HDFC Bank climbed 3.9 per cent to Rs1,255.45, its highest close in two weeks. Bigger rival ICICI Bank rose 1.7 per cent to Rs666.90.

"The oil price fall came in handy as funds and investors decided to cover short positions in the index futures and financial counters rather than roll them over," said Deven Choksey, chief executive at brokerage KR Choksey.

The 30-share main index closed up 0.22 per cent, or 31.87 points, at 14,482.22, with 20 components rising. It had fallen as much as 1.1 per cent in early deals. The benchmark is down 27.2 per cent so far in 2008.

Oil fell more than $1 a barrel to below $114 as the US dollar strengthened, countering concern a Caribbean hurricane could threaten oil installations in the Gulf of Mexico.

But top listed firm Reliance Industries slipped 2.3 per cent to Rs2,179.65, its lowest close in almost four weeks, on foreign fund selling, traders said.

currency

Rupee falls further

The Indian rupee fell to 17-month lows yesterday and weakened beyond 44 per dollar.

The partially convertible rupee was at 44.07/08, a level it last tested on March 20, 2007 and 0.6 per cent weaker than Monday's close of 43.79/80.

- Reuters