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Asia300

India shares gain as funds boost purchases; banks rebound

MUMBAI (NewsRise)--Indian shares rose Tuesday as domestic funds stepped up purchase of some index heavyweight stocks amid a rebound in regional markets.

The benchmark BSE Sensex index rose 0.2% to 26,643.24 points after a range-bound trading session. The broader NSE Nifty 50 index also ended 0.2% higher at 8,192.25 points.

Most banking stocks rebounded from yesterday's losses, with ICICI Bank and Axis Bank figuring among the top gainers. Bharti Airtel, India's biggest mobile phone operator, and Hero MotoCorp, the nation's largest two-wheeler maker, declined.

Nineteen of the 30 Sensex constituents ended higher, while overall advancing stocks beat declining ones 1,851 to 897, with 134 issues ending unchanged.

"Retail and domestic funds are getting more active assuming a good entry point for the year," said Vinod Nair, head of research at Geojit BNP Paribas Financial Services. "But the broad market continued its narrowness given the muted participation from foreign investors."

Analysts expect the indexes to continue witnessing sluggish trading in the immediate term amid lack of fresh triggers. The U.S. jobs data due Friday and upcoming quarterly company earnings starting mid-January could set the tone for future direction, they say.

ICICI Bank, India's biggest private lender, rose 1% to 254.30 rupees. Axis Bank climbed 1.9% to 455.20 rupees, while larger rival State Bank of India finished 0.5% higher at 244.85 rupees.

ICICI Bank reduced its lending rates by 70 basis points late Monday, joining rivals who have slashed the rates over the weekend.

Financial stocks, which have the highest weight on the index, declined on the first day of the calendar year as investors feared that the sharp cut in lending rates may impact net interest margin and as a consequence profitability at banks.

"We are concerned on the direction as it does appear that the onus to restart lending is moving back to public banks at the cost of profitability," Kotak Institutional Equities said in a note. "The recent cuts in lending rates, lack of data on the deposits mobilized (and) sharp moves in interest rates in an extremely muted demand environment where non-performing loans are aggravating revenue recognition, make it a challenge to forecast near-term net interest income/revenues."

Among other notable gainers on Tuesday, cigarette maker ITC rose 0.9% to 243.25 rupees and energy conglomerate Reliance Industries finished 0.7% higher at 1,090.65 rupees.

Bharti Airtel fell 2.4% at 303.65 rupees on concerns profit margins could further take a hit after the company said it will offer free data for a year to customers who switch to its 4G services before Feb. 28.

Hero MotoCorp fell 1.4% to 2,987.35 rupees after announcing a near 34% year-on-year decline in total sales for December.

Software exporter Infosys declined 0.7% to 994.65 rupees. According to media reports, chief executive Vishal Sikka, in a letter to employees, stressed the importance of automation and warned against a lackadaisical attitude towards greater value creation.

In rest of Asia, China's Shanghai Composite ended up 1.1% while South Korea's Kospi rose 0.9%. Hong Kong's Hang Seng index closed 0.7% higher.

--Dhanya Ann Thoppil

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