By Bharath Rajeswaran and Hritam Mukherjee
(Reuters) – Indian shares recovered from a flat start on Tuesday, boosted by a rebound in information technology stocks after a two-session drop and a rise in financials on relatively cheaper valuations, but dull earnings and sustained foreign selling capped gains.
The NSE Nifty 50 rose 0.1% to 24,803 points as of 10:12 a.m. IST, while the BSE Sensex gained 0.2% to 81,270.8 points.
Eight of the 13 major sectoral indexes advanced.
The IT index, which lost about 2.7% in the previous two sessions, added 0.4% on the day. Financials rose 0.5%.
“A rise in liquidity has driven an improvement in deposits growth of India’s banks which is now converging with loan growth,” said analysts led by Mahesh Nandurkar of Jefferies in a note.
“Valuations are in favour of the sector as the price-to-earnings ratio of bank index remains a tad below the 10-year average of 15x,” they added.
Among individual stocks, India’s No. 2 carmaker Hyundai Motor India debuted on the NSE at a discount of 1.3% over its issue price of 1,960 rupees.
The $3.3 billion initial public offering was oversubscribed by more than two times last week. Nomura and Macquarie started coverage of the company ahead of its debut, forecasting up to 26% potential gains over the next 12 months.
The broader, more domestically focussed small-caps mid-caps fell 1.3% and 0.7%, respectively.
Domestic equities have witnessed profit taking since hitting record high levels on Sept. 27.
While FIIs were net sellers for 16 sessions, domestic investors remained buyers for 20 session in a row till Monday, cushioning foreign outflows and capping the benchmark losses.
“While we do see a re-balancing between India and China in the short-term from foreign investors, sustained inflows from retail and mutual fund investors would continue to lend support to the market,” said Vineet Agrawal, co-founder of online investment platform altGraaf.
(Reporting by Bharath Rajeswaran and Hritam Mukherjee in Bengaluru; Editing by Sumana Nandy)
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