The Sensex rose 0.4% in choppy New Year trading on Monday as investors cheered a government decision to allow foreigners to directly buy stocks, but the market remained unconvinced about risk appetite amid worries about the global economy.
Coal India and Tata Motors climbed on positive newsflow, but Bajaj Auto tumbled 7.3% on worries over its sales growth outlook, while iron ore exporters slid after a sharp increase in export duty.
Most issues still relate to the fact that investors are not returning to the market for long-term investment, said Deven Choksey, chief executive at KR Choksey Shares & Securities.
?I don’t see the market heading down much further, but till results season starts, there is likely to be uncertainty.?
The Sensex closed up 0.41% at 15,517.92 points. It had fallen as much as 0.6% earlier. Nineteen of its components closed higher.
The Sensex had been among the worst performing markets in the world in 2011, falling 24.6%, as high interest rates and slowing economic growth dented investor confidence.Foreign funds were net sellers of more than $450 million last year, compared with inflows of over $29 billion in 2010.
With many world markets closed on Monday, activity was relatively light. In the broader market, there were 749 gainers against 666 losers on light volume of 422 million shares.
The Nifty ended up 0.3% at 4,636.75. The government said on Sunday individual foreign investors would be allowed to directly access the stock market from January 15. It was the latest step to liberalise Asia’s third-largest economy after a year of big losses in the stock market.
?It’s a good decision for the longer term, but won’t have any impact for the moment because no foreign investor wants to put in money right now,? said Ambareesh Baliga, chief operating officer at Way2Wealth Securities.
The market was also supported by comments from the central bank’s governor and positive manufacturing data.
The Reserve Bank of India is likely to begin easing monetary policy to address concerns about economic growth, governor Duvvuri Subbarao said in a BBC interview, reiterating comments made by the central bank on December 16, when it kept rates unchanged.
Meanwhile, European shares made a positive start to the New Year as they extended a two-week rebound in thin trade on Monday, with automotive stocks and euro zone banks leading the charge. At 1216 GMT the FTSEurofirst 300 index of European shares was up 0.6% at 1006.07, breaking above the full retracement level of the December 7-Dec 19 fall.
