BSE Sensex falls marginally; Reliance Industries gains

People walk outside the Mumbai Stock Exchange building February 10, 2011.

MUMBAI (Reuters) - The BSE Sensex closed slightly lower on Wednesday after a day of see-sawing, as investors digested results from the country's IT industry leader Tata Consultancy Services (TCS.NS) and a potential share buyback from heavyweight Reliance Industries (RELI.NS).

Reliance, the country's biggest company by market capitalization, closed up 5.1 percent at 779.75 rupees, after the cash-rich energy conglomerate said it would consider a share buyback on Friday.

The company, controlled by Mukesh Ambani, India's richest man, saw its share price slump by around 35 percent in 2011. That helped to drag the benchmark index down 25 percent for the year, making India one of the world's worst-performing markets.

"A fear of poor performances in the December quarter is weighing on the market," said Nitin Khandkhar, founder of Nitin Khandkhar Institutional Research.

"Reliance obviously is a big weight in the opposite direction, but the headwinds from results are present."

Tata Consultancy Services (TCS.NS) (TCS), India's biggest software services provider, fell 2.5 percent to 1,076.15 rupees after analysts suggested a feared slowdown due to economic turmoil in Europe and the United States was starting to bite.

TCS met estimates with a 23 percent rise in net profit during the December quarter, but analysts cautioned on low revenue growth from its key financial services sector.

"While TCS is optimistic about the environment, management commentary indicated softness in business evidenced by delays in decisions," wrote HDFC Bank in a research note on Wednesday.

Rivals Infosys (INFY.NS), which cut its fiscal year revenue growth outlook last week due to the euro zone debt crisis, and Wipro (WIPR.NS), which reports its results on Friday, also fell on Wednesday.

Infosys shares closed down 1.9 percent at 2,612.05 rupees, while Wipro ended the day at 404.10 rupees, a fall of 2.7 percent.

The main 30-share BSE index .BSESN ended down 0.09 percent at 1,6451.47 points, with 18 of its components falling.

Airlines stocks surged for a second consecutive day after the federal aviation ministry said late on Tuesday it would recommend that the government allow foreign carries to buy stakes of up to 49 percent in domestic players.

Jet Airways (JET.NS), India's biggest airline, climbed 4.9 percent to 246.40 rupees, debt-laden Kingfisher Airlines (KING.NS) ended the day up 1 percent at 25.35 rupees and SpiceJet (SPJT.BO) closed at 22.90 rupees, a rise of 2.5 percent.

Essar Oil (ESRO.NS) slumped as much as 20 percent in early trade after India's Supreme Court passed a ruling late on Tuesday that means the refiner will no longer be able to defer payment of a sales tax.

The stock recovered some losses to close down 12.1 percent at 51.15 rupees.

Coal India (COAL.NS) shares fell as much as 4.3 percent after the coal minister said the world's largest coal miner was not expected to raise its prices after finalising a wage hike agreement with workers this month.

The stock closed down 3.4 percent at 339.80 rupees.

The 50-share NSE index .NSEI ended down 0.23 percent. In the broader market, losers outpaced gainers by a ratio of a little over 2 to 1 on total volume of about 761 million shares.

The BSE Sensex had closed at a near 6-week high on Tuesday, as investors eyed a potential loosening of monetary policy by the country's central bank on the back of an easing in inflation.

Automakers and developers, which have been hit hard by the increased cost of credit, posted strong gains on Tuesday. Top listed developer DLF (DLF.NS) and Hero MotoCorp (HROM.NS), the world's largest two-wheeled vechicle maker, continued to rise on Wednesday, closing up 1.7 percent and 1.8 percent respectively.

Markets across Asia steadied on Wednesday after sentiment improved on soothing economic data the day before, as focus returns to Europe with Portugal testing investor confidence in a debt sale and Greece resuming talks on its debt restructuring.

The MSCI's broadest index of Asia Pacific shares outside Japan .MIAPJ0000PUS was up 0.5 percent at 1000 GMT, while Tokyo's Nikkei average .N225 finished up 1 percent.

STOCKS ON THE MOVE

* Bharat Petroleum Corporation Ltd (BPCL.NS) rose as much as 5.0 percent after the company said its natural gas discovery off the coast of Mozambique may hold 15 trillion to 30 trillion cubic feet of gas reserves.

* Reliance Infrastructure (RLIN.NS) rose as much as 4.2 percent after the company said it has injected 5.2 billion rupees into two joint venture power projects in New Delhi.

* Bharat Heavy Electricals Ltd (BHEL.NS) fell as much as 3.3 percent after Goldman Sachs downgraded the power equipment maker to "sell" from "neutral.

(Editing by Aradhana Aravindan)