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India stocks little changed as investors analyze state poll verdict, inflation data

Prime Minister Modi's BJP may fall short of majority in Karnataka

MUMBAI (NewsRise) -- Indian shares ended little changed on Tuesday after a volatile session as investors digested the results of a closely watched state election and quicker-than-expected retail inflation.

The BSE Sensex declined less than 0.1% to 35,543.94 while the Nifty 50 Index ended almost unchanged at 10,801.85.

The Sensex had risen to near 36,000 earlier in the day after initial trends indicated that Prime Minister Narendra Modi's Bharatiya Janata Party would emerge victorious in the elections in southern Karnataka state. The outcome was seen as a test for Modi's popularity before the country heads for national elections, likely in the middle of next year.

According to the latest information available, the BJP was leading in 104 of the total 222 seats, while its main rival Congress party was ahead in 78 seats. As many as 40 seats were led by candidates not aligned to the two parties.

"The verdict will be seen as a big sentimental positive for the indices, which were factoring in a severely fractured mandate," said Amar Ambani, partner & head of research at IIFL Investment Managers. Investors will expect similar results in next year's national elections, he said.

The stocks came off the day's highs in the latter half of the session as it looked like the BJP, while emerging as the single largest party, would fall just short of a simple majority.

Meanwhile, investors also had to contend with inflation data that increased the odds of an interest rate increase by the country's Monetary Policy Committee in the coming months. India's retail inflation rose 4.58% in April, up from 4.28% pace in the prior month and faster than the 4.42% median forecast of economists polled by Reuters. Economists also estimated that core inflation climbed to a near-four-year high of around 6%.

State Bank of India led lenders lower on Tuesday, falling 1.9%. ICICI Bank dropped 0.6% and Axis Bank slipped 0.1%.

Hindustan Unilever advanced 0.7% after the consumer goods company reported a better-than-expected 14% rise in March quarter net profit.

Lupin ended 0.5% lower. The pharmaceutical company reported an unexpected loss for the March quarter amid a one-time impairment charge related to an acquisition.

Tata Steel advanced 2.3%. India's bankruptcy court approved the company's takeover of the debt-laden Bhushan Steel. Shares of Bhushan Steel rose by the maximum permissible daily limit of 5%.

Fortis Healthcare advanced 2.8% to 152.95 rupees after Manipal Healthcare Enterprises, backed by TPG Capital, raised its offer for the healthcare company.

Punjab National Bank dropped 3.8% after reporting a loss in the January-March period in the wake of a $2 billion scam perpetrated by jewelers. Dr. Lal PathLabs surged 10% after a 27% increase in March quarter net profit.

--Nimesh Vora

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