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India shares rebound as fall in US bond yields boosts risk asset demand

Infosys, Tata Consultancy advance as rupee at lowest in one-and-a-half years

MUMBAI (NewsRise) -- Indian shares rebounded from one-month lows on Thursday as decline in long-term U.S. bond yields after the Federal Reserve's meeting minutes boosted demand for risk assets.

The BSE Sensex advanced 0.9% to 34,663.11 and the Nifty 50 Index rose 0.8% to 10,513.85. Infosys and Tata Consultancy Services added 3.1% each, as the rupee hovered near its lowest level in one-and-a-half years against the U.S. dollar. Larsen & Toubro Infotech climbed 5.9% after a 14% rise in March quarter net profit. A BSE index of information technology companies closed 2.5% higher.

Oil & Natural Gas fell 4.5% and Oil India tumbled 6.8% after the Press Trust of India reported the government is considering a levy of windfall tax on upstream state-run oil producers to cushion the blow on consumers from surging petrol and diesel prices.

Tata Motors fell 6.6% to 288.95 rupees after net profit for the March quarter halved from a year earlier. Jefferies cut the target price on the stock to 440 rupees and CLSA slashed it to 295 rupees, citing challenging outlook for the company's U.K. unit Jaguar Land Rover.

Sensex's best day in seven-weeks came after U.S. 10-year borrowing cost declined to near 3% following the minutes of the Fed meeting. The minutes indicated that the U.S. central bank was willing to allow inflation to overshoot its 2% target, allaying fears of quicker pace of monetary tightening. Policymakers noted that a temporary period of inflation modestly above 2 % would be consistent with their "symmetric" inflation objective, sending the 10-year bond yield down by the most in two months.

"The overall tone of the minutes carried a dovish tinge with respect to medium-term policy," Morgan Stanley said in a note. "Nothing in the minutes suggests that anything other than the gradual pace of policy tightening will continue."

Among other major movers on the BSE on Thursday, GAIL (India) dropped 5.1% after its March quarter net profit missed estimates of analysts polled by Reuters.

Bharti Airtel advanced 4.1% after the mobile phone operator closed at one-year lows in the previous session. State Bank of India continued its post-earnings rally, adding 2%. Housing Development Finance ended a six-day losing run, climbing 1.2%.

Jet Airway fell 7% after it swung to a net loss for the March quarter. NCC jumped 8.8% after the construction company reported a 61% jump in net profit for the same period.

--Nimesh Vora

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