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Mumbai: Indian shares snapped a four-day fall and rebounded more than three per cent yesterday, as investors bought beaten-down software firms while hopes banks would cut lending rates revived interest in financial stocks.
But analysts remained wary about foreign fund outflows and quarterly results, which showed slowing profit growth.
The 30-share BSE index gained 3.36 per cent, or 593.9 points, to 18,242.58, with all but three components rising.
The benchmark had risen more than one per cent early on, but slipped into negative territory by mid-morning, reflecting shaky sentiment, before pulling back up in the afternoon.
The index fell 13 per cent in January, its worst monthly performance since May 2004, when it shed 15.8 per cent.
"The weak players are out of the market after yesterday's futures and options expiry and whatever was left got squared off in today's morning shake-out," said D.D. Sharma, vice-president at Anand Rathi Securities.
Foreign funds
Foreign funds were net sellers of $151.6 million of shares on Wednesday, taking sales to about $4 billion in 11 sessions, after pouring in $17.4 billion in 2007.
Property firm Emaar MGF Land began its initial share sale yesterday, a day after it lowered the indicated price band citing market volatility. It aims to raise up to $1.64 billion against $1.8 billion planned earlier.
The firm had received bids for 16 per cent of the offering by 4.10 pm.
"There are clear signs of a liquidity tightening. Initial public offers are cutting their price band. Private equity deals have become less aggressive," said Jigar Shah, senior vice-president at Kim Eng Securities India. "We have taken a defensive stance," he said. "Markets are not going anywhere in the next few months."
Bellwether Infosys gained 5.8 per cent to Rs1,591.10 and sector leader Tata Consultancy gained 6.2 per cent. Wipro was up 5.8 per cent and Satyam added 8.2 per cent.
Shares in mortgage lender HDFC jumped 5.4 per cent after it cut retail prime lending rates by 25 basis points. ICICI Bank rose 4.6 per cent and State Bank of India gained 1.1 per cent.
The 50-share NSE index gained 3.5 per cent to 5,317.25.
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