Sensex up 0.8% but traders remain wary

Bangalore: Indian shares rose 0.8 per cent yesterday after subdued oil prices and hopes the United States would hold rates for the rest of the year boosted world markets, but traders were wary about the outlook.

A late bout of profit-taking after the main index climbed more than 3 per cent in the morning underscored the market's soft underbelly, and analysts said foreign fund support was needed to sustain the rally.

Financial stocks such as ICICI Bank and automobiles like Maruti Suzuki rose on expectation a drop in oil prices would halt the pace of inflation and ease upward pressure on interest rates.

"We have been advising clients to book some profit after the market had risen so much so fast," said Neeraj Dewan, a director at Quantum Securities. "People preferred to wait till tomorrow to see the inflation numbers."

The annual inflation rate is expected to have risen to 12.02 per cent in late July, according to a Reuters poll. The data is due today

A slide in prices of oil, India's biggest import, to a three-month low of around $118 a barrel from a record high above $147 in mid-July, is expected to ease the pressure on inflation.

The main 30-share BSE index climbed 0.75 per cent, or 112.47 points, to 15,073.54, its highest close since June 19, with 20 components gaining ground. The index had risen as much as 3.1 per cent during trade.

No 2 lender ICICI gained nearly 2 per cent to Rs706.80, its highest close in about two weeks and taking gains to more than 10 per cent in two days. Smaller rival HDFC Bank rose 2.7 per cent to Rs1,216.80

Top car maker Maruti surged 6.25 per cent to Rs652.80 and Tata Motors closed up 4.3 per cent at Rs426.70.