MUMBAI (NewsRise) -- Indian shares recovered from a two-day selloff amid speculation Prime Minister Narendra Modi's government may soon introduce measures to shore up the economy reeling under rising fuel prices and a weaker rupee.
The BSE Sensex settled 0.8% higher at 37,717.96 and the Nifty 50 Index rose 0.7% to 11,369.90 after a choppy session. Both the indexes rose the most since Aug. 27. The Sensex's gains came amid a commonly followed momentum indicator - the 14-day Relative Strength Indicator - falling below 30 for the first time since late-May. A reading below 30 on the RSI signals an oversold market. Indian financial markets will remain closed tomorrow for a local holiday.
On Wednesday, a finance ministry official said Prime Minister Modi is likely to review the country's economic situation this weekend. Separate media reports said after the meeting, the government may take some steps to check the rupee's fall and curb the jump in fuel prices.
Soap-to-detergent manufacturer Hindustan Unilever climbed 2.3%, rebounding from its lowest in three months. Cigarette maker ITC added 3.1% after falling to six-week lows in the previous session. Hindustan Petroleum, which closed 1.4% lower, paced losses among fuel retailers after Brent crude climbed to a two-month high. Energy explorer Oil and Natural Gas Corp. advanced 0.4%.
The rupee slipped to a yet-another record low of 72.92 on Wednesday amid surging crude oil prices, before rising to the day's high of 71.91 against the dollar. In the aftermath of increasing international oil prices, the rupee is Asia's worst performing currency this year. India imports three-fourth of its crude requirements and the more than 40% increase in Brent crude over the last one year caused India's trade deficit to widen to the highest in years.
"Despite today's move, we continue to remain cautious on the Indian markets," Jayant Manglik, President, Religare Broking, said. "Key macro data, movement of crude oil prices, currency, and global developments, especially on the trade war front, will dictate the market trend."
The Sensex's first recovery in three sessions came despite negative regional cues. Majority of the Asian benchmark indexes closed lower on Wednesday as U.S. and China trade concerns persisted. On Tuesday, Beijing sought the backing of the World Trade Organization to impose $7 billion of sanctions on the U.S. over dumping duties.
Banking shares were mostly lower, and a BSE index of real-estate companies slipped 0.3% ahead of the retail inflation data, due after market hours on Wednesday. Axis Bank and ICICI Bank declined as much as 2.3% and Indiabulls Real Estate, down 2.4%, led property companies lower.
Sun Pharmaceutical Industries rose 3%. The drugmaker, responding to news reports, said late Tuesday the U.S. drug regulator's inspection of a facility in India's northern state of Punjab is currently ongoing.
Tata Motors declined 1.7%. The CEO of the automaker's U.K. unit Jaguar Land Rover warned on Tuesday that a wrong Brexit deal could hurt jobs and production, Reuters reported.
--Nimesh Vora and Dipika Lalwani