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India stocks little changed as Tata Consultancy slumps

Fall in software exporter erodes gains triggered by inflation data

MUMBAI (NewsRise) -- Indian shares ended little changed on Tuesday, as losses in heavyweight Tata Consultancy Services offset gains from better-than-expected economic data.

The BSE Sensex declined 0.2% to 33,856.78%, while the Nifty 50 Index advanced 0.1% to close at 10,426.85.

Tata Consultancy Services tumbled 5.2% to 2,892.45 rupees after parent Tata Sons sold a portion of its shareholding in the country's biggest software exporter, according to reports. Reuters publication IFR reported that Tata Sons sold 31.3 million shares of TCS, representing 1.63% of the equity capital, at 2,872 rupees per share.

The benchmark Sensex had climbed to 34,077.32 earlier in the day as inflation cooled and industrial activity accelerated in Asia's third-largest economy.

India's retail prices in February rose 4.44%, easing from 5.07% in the previous month and lower than the 4.80% expected by economists. The data comes at a time when wider fiscal deficit targets and a proposed increase in minimum support prices of crops have fanned concerns over inflation picking up, which could prompt the county's rate-setting committee to increase interest rates. At the February meeting, members of the Monetary Policy Committee had observed inflation continued to rise broadly and upside risks to price outlook were building up.

"A better-than-expected inflation print is likely to allay fears of a sooner-than-expected rate hike...," Macquarie Group said in a note.

There was more positive economic news as India's industrial output growth quickened to 7.5% in January from 7.1% in the previous month.

Investors had to contend with more volatility in the last of hour of trade after India's Junior Finance Minister Shiv Pratap Shukla said the government had received requests for withdrawal of a proposal in the federal budget to introduce tax on long-term capital gains. The government decision will be reflected in the official amendment, if any, at the time of passing the budget proposals by the nation's parliament, he said.

Banking stocks helped limit the Sensex's losses amid TCS's tumble. Axis Bank added 2.2%, and State Bank of India and ICICI Bank climbed at least 0.8% each.

Bank of India led state-run lenders higher, jumping 7.5% amid a report by Moneycontrol that the bank had recovered 70 billion rupees ($1.1 billion) worth Standby Letters of Credit from other banks in the last two months. The report cited a Bank of India executive director as saying that the recovery would substantially improve the lender's balance sheet.

A Nifty index of state-owned banks, hovering at its lowest level in one-and-a-half years, climbed 2.3%. Bank of Baroda and Canara Bank added at least 5.7% each.

InterGlobe Aviation, the parent of low-cost airline Indigo, closed up 2% at 1,302.60 rupees. It had declined earlier in the day after India's aviation regulator grounded several aircraft fitted with certain Pratt & Whitney engines. The regulator said eight planes operated by Indigo would be affected by the directive.

Kotak Securities retained its 'buy' rating on the stock with a target price of 1,500 rupees, saying that "while additional grounding of aircraft is a negative, P&W's latest announcement of a fix for these particular aircraft should boost supply of modified engines, and should not lead to a material operational disruption."

--Nimesh Vora and Vidyut Deshpande

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