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Indian shares end flat as weak blue chips take sheen off BoJ cheer

MUMBAI (NewsRise) -- Indian shares ended little changed Wednesday, as late selling in index heavyweights eroded gains stemming from improved risk appetite after Bank of Japan modified its policy framework.

The benchmark BSE Sensex ended 0.1% lower at 28,506.42 points Wednesday, while the broader NSE Nifty50 index ended 0.01% higher at 8,777.15 points.

Cigarette maker ITC, lenders ICICI Bank and State Bank of India and Reliance Industries ended lower Wednesday, while Tata Steel, information technology stocks and Hindustan Unilever rose.

Regional sentiment improved early Wednesday after the Bank of Japan said it will abandon monetary base targets to control the nation's yield curve. The BoJ, which buys government bonds at a rate of 80 trillion yen a year, currently plans to keep buying bonds at a pace so that the balance of its holdings increases by that amount.

The central bank, which held interest rates steady at negative 0.1 percent, also said it will expand the monetary base until inflation rises above the 2% target.

At the post policy conference, Governor Haruhiko Kuroda said the changes in framework will allow the BoJ to have a flexible, sustainable policy, adding that the central bank would not hesitate to ease policy further to help the economy.

Japan's Nikkei 225 index led gains in Asia Wednesday, rising 1.9%. Hong Kong's Hang Seng and South Korea's KOSPI advanced 0.6% and 0.5%. China's Shanghai Composite closed 0.1% higher.

Markets now await the outcome of the U.S. Federal Reserve's policy review, due later today. Consensus expectation is for the central bank to hold rates steady, but participants are interested in any indications of a rate increase later this year.

"We rule out a rate hike in immediate future given the poor economic data, including weak jobs growth numbers," said Akash Jain, vice president - equity research at Ajcon Global. "We also believe the market is richly valued as of now, largely owing to higher liquidity."

On the Sensex, 16 of the 30 constituents ended higher Wednesday, while overall advancing issues outnumbered declining ones 1,413 to 1,312 and 199 closed unchanged.

Cigarette maker ITC fell 1.3% to 253.80 rupees, making it the biggest contributor to losses on the Sensex. The company's shares have ended lower for the last three sessions and are down 2.5% for the week so far.

The nation's largest private lender ICICI Bank slipped 0.9% to 269.65 rupees. The bank's insurance arm ICICI Prudential Life Insurance saw full subscription of its initial public offering on Wednesday.

State Bank of India fell 1.1% to 251.35 rupees.

Reliance Industries ended 0.3% lower at 1,071.35 rupees, adding to Tuesday's 0.8% slide. The stock, up 1.3% in September so far, remains on course for a fourth consecutive monthly gain.

State-owned Power Grid Corp snapped three-session gains to end 1.5% lower at 175.35 rupees.

Tata Steel ended 1.1% higher at 369.30 rupees, leading gains on the Sensex.

The nation's steel consumption will likely grow 5.3% in the current fiscal year ending March 2017 and 5.6% in the next fiscal year, industry body Indian Steel Association (ISA) said in a statement today, according to the Times of India.

Index heavyweight and information technology bellwether Infosys rose 0.6% to 1,056.70 rupees Wednesday.

"Infosys is gaining share in large deals and wallets of large clients, and is positioned well to capture discretionary spends," Kotak Institutional Equities wrote in an investor note today. "Near-term volatility and risks to guidance aside, Infosys is making right investments in automation and digital for sustained profitable growth over the next few years."

Its peers Wipro and Tata Consultancy Services rose 0.6% to 483.25 rupees and 0.1% to 2,413.50 rupees, respectively.

Retail heavyweight Hindustan Unilever advanced 1% to 912.20 rupees, recouping yesterday's 1% loss.

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