Indian shares rise 1.6% despite low volumes

Mumbai: Indian shares rose 1.6 per cent on Monday, extending gains to a third straight session, but volume was light as investors awaited a confidence vote in parliament that would decide the fate of the government.

"Investors believe the government has a fair chance of pulling it off. Nevertheless, there is the event risk, a major one, and people would rather wait than take a call," Sandeep Neema, fund manager at JM Financial Mutual Fund said.

The main 30-share BSE index ended up 1.57 per cent, or 214.64 points at 13,850.04. It briefly fell into negative territory after opening one per cent higher but rose as much as 1.8 per cent in late deals. As many as 24 of its components gained.

However, total volume fell to 219 million shares from a daily average of more than 300 million, as many investors kept to the sidelines awaiting for clarity on political developments. Losing issues led gainers 1,366 to 1,162.

Reliance Communications rallied 2.6 per cent to 446.60, its highest close in nearly a month, after tie-up talks with South Africa's MTN were called off and investors saw the No. 2 mobile operator still pressing on with expansion plans.

Battered financial stocks rose in tune with global cues and supported by hopes slower-than-expected inflation would ease the pressure on the central bank to raise interest rates when it reviews policy next week.

ICICI gains

No. 2 lender ICICI Bank, which has lost nearly half its value this year, led the main index up as oil prices at below $130 a barrel, well off record highs above $147, eased inflation expectations. ICICI rose 4.3 per cent to Rs644.10, its highest close since June 27.

Top lender State Bank of India firmed 3.7 per cent to Rs1,347.45, its best close in just over a month. The bank index rose 3.9 per cent.

Traders said sentiment was also boosted after Citigroup turned out a smaller-than-expected quarterly loss, providing comfort on the sector's stability.

Traders said the market would be choppy until the political uncertainty ended. The BSE index, which has rebounded 10 per cent in the three sessions, is down 32 per cent in 2008, making it one of the worst Asian market performers.

"The current intermediate uptrend could prove to be short-lived. The outcome of the trust vote will not only determine the fate of the government but also the near-term trend of the market," brokerage India Infoline said in a research note.

Satyam Computer Services extended its 7.5 per cent fall on Friday, on concerns about cautious outsourcing prospects. It fell 4.1 per cent to Rs367.10, its lowest close in more than four months.

Traders said Credit Suisse had cut Satyam to underperform from outperform and the price target was slashed to Rs425 from Rs575.

The broader 50-share NSE index ended up 1.64 per cent at 4,159.50.