BSE Sensex off highs as bleak outlook weighs

The Bombay Stock Exchange (BSE) is seen in this November 2004 file photo. The BSE Sensex faltered after a firm start on Tuesday as a weak economic outlook kept investors wary, despite a rally across much of Asia.

MUMBAI (Reuters) - The BSE Sensex faltered after a firm start on Tuesday as a weak economic outlook kept investors wary, despite a rally across much of Asia.

By 11:37 a.m., the 30-share BSE index was up 0.3 percent at 9,090.65 points, after rising as much as 1.75 percent and then briefly slipping into the negative territory.

Top bus and truck producer Tata Motors fell 4.7 percent to 135.65 rupees after it reported a 33 percent drop in January sales.

Energy major Reliance Industries, which has the highest weight in the index, rose 0.7 percent to 1,287 rupees as investors expected gas sales to help the company.

A court last week allowed Reliance to sell gas from its KG fields off India's east coast, pending judgement in a contract dispute case with another firm.

Fourteen of the index components were higher while in the broader market, losers led gainers in the ratio of 1.4:1 on low volume of 104.1 million shares.

Gajendra Nagpal, CEO of Unicon Financial, said the market drew comfort from a Asian rally at the start but there was resistance as the global economic outlook remained downbeat.

Asia's economies, which have been hit hard by the financial crisis, could recover next year, the head of the International Monetary Fund said, but warned that the export-dependent continent could not pull through on its own.

Shares in fraud-hit Satyam Computer Services shed early gains and were trading 1.65 percent lower at 56.65 rupees. India's market regulator said it would change its rules on mandatory open offers to buy shares in firms after an approach

from the outsourcer's new board, but gave no timeframe.

Engineering firm Larsen & Toubro, which is seen as a favourite in the race to buy Satyam, fell 0.6 percent to 658 rupees after rising as much as 2.7 percent in early deals.

The 50-share NSE Index was trading 0.2 percent higher at 2,773.75 points.

STOCKS ON THE MOVE

* Hospital operator and life insurer Max India Ltd was up 2.5 percent at 117.30 rupees ahead of its board meeting to consider a rights share issue.

* Private refiner Essar Oil fell 3.8 percent to 69.20 rupees, after it said it had delayed its refinery expansion plans due to the economic slowdown and would lift capacity to its final target of 680,000 barrels per day a year later than earlier

forecast.

MAIN TOP THREE BY VOLUME

* Satyam Computer on 14.3 million shares

* Spice Communications on 10.2 million shares

* Unitech Ltd on 5.2 million shares

(For Quotes and Interactive Charts of BSE Sensex click here)