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Indian shares post modest gains as Axis Bank, Sun Pharma advance

Stock upgrades from Deutsche Bank, Credit Suisse help Axis, Sun

MUMBAI (NewsRise) -- Indian shares ended marginally higher on Thursday, helped by gains in private lender Axis Bank and Sun Pharmaceutical Industries.

The benchmark BSE Sensex index gained 0.2%, or 55.52 points, to 32,241.93, while the broader Nifty 50 rose less than 0.1%, or 7.30 points, to end at 10,086.60.

"Today's rangebound movement is due to a lack of major triggers," said Akash Jain, vice president of equity research at Ajcon Global Services. "Currently the markets are being ruled by domestic liquidity, rather than fundamentals."

With two major initial public offerings worth 141 billion rupees ($2.20 billion) due to hit the market in coming days, trading activity could get muted, he said.

"There could be a possibility of big investors selling in the secondary market and buying in the primary market, as returns on IPO's have been attractive in the past six months."

The IPO of ICICI Lombard General Insurance Co. is scheduled to open for order-taking on Friday, while SBI Life Insurance Co.'s $1.3 billion offer will hit the market next week.

Data released on Wednesday showed India's wholesale price inflation rose 3.24% in August, the fastest pace since April, driven by sharp increase in prices of food and fuel. Retail inflation accelerated to 3.36% in August from a year earlier, the fastest pace of annual expansion since March, according to data released earlier this week.

Thirteen of the 30 Sensex constituents ended higher, while overall declining issues edged past advancing ones 1,326 to 1,291 while 151 remained unchanged.

Axis Bank rose 4.2% to 519.75 rupees. Deutsche Bank upgraded the stock to `Buy' from `Hold' and increased its price target to 600 rupees from 560 rupees. "The business model has now become more retail-oriented, which should support higher valuations," it said.

Sun Pharmaceutical advanced 4.2% to 524.25 rupees. Credit Suisse upgraded the stock to `Outperform' from `Neutral,' raising the price target to 595 rupees from 490 rupees on growth prospects due to specialty assets. Increasing contribution of specialty products addresses growth concerns in generics and will help the company revert to a 20% profit growth trajectory, Credit Suisse said in an investor note.

Other drug makers also rose with Cipla adding 1.9% and Lupin finishing 1.2% higher.

"The Indian pharma sector's valuation multiples have contracted over 25% over the past two years and most of the sector's challenges seems to be largely discounted at current share prices," JM Financial Institutional Securities said in a note. "This, in our view, is an opportunity to accumulate stocks from a long term view."

Among other key movers on Thursday, Tata Motors rose 3.6%, its third straight session of gains as investors bet that new launches of its Jaguar Land Rover vehicles would spur sales in coming months.

Infosys, one of the key large-cap laggards this year, rose 1% as mutual funds stepped up purchase of the stock, dealers said.

Reliance Industries fell 0.6%, recording its first decline in four sessions.

State-run Bharat Heavy Electricals advanced 3.7%. The company and Kawasaki Heavy industries will collaborate for making rolling stock for bullet trains, Japan's Prime Minister Shinzo Abe said after the inauguration of the Mumbai-Ahmedabad high-speed bullet train project.

Thermax jumped 7.3% after it secured a $43 million contract from a UAE-based cement company for a turnkey captive power plant.

Tata Chemicals gained 0.3%. The company is in talks with Indorama Holdings BV of Netherlands for a potential sale of phosphatic fertilizer business in Haldia, and it expects to receive 4 billion rupees to 5 billion rupees from the deal, it said in a stock exchange filing late Wednesday.

Asian shares ended mixed. The Nikkei Asia300 that tracks influential companies out of Japan ended 0.2% higher.

--Nivedita Naidu

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