Indian shares snap five-day losing streak; rate decision key

Fri Dec 14, 2012 5:06pm IST

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* BSE index gains 0.46 pct; NSE ends 0.48 pct higher
    * Lenders gain on lower-than-expected inflation data
    * Fertiliser shares surge on govt's urea manufacturing push

    By Abhishek Vishnoi
    MUMBAI, Dec 14 (Reuters) - Indian shares rose on Friday for
the first session in six as lenders such as ICICI Bank Ltd
 gained after lower-than-expected inflation data
reinforced hopes the central bank would start cutting interest
rates in January. 
    India's wholesale inflation cooled to its weakest pace in 10
months in November, a positive sign for the struggling economy,
but probably not a big enough slowdown to persuade the central
bank to cut interest rates next week. 
    Investors are now waiting for the Reserve Bank of India's
rate decision on Tuesday. Although the central bank is not
expected to ease policy then, traders said they could cut the
cash reserve ratio or sound more dovish on inflation.
    
    "Demand driven inflation has come down to extremely low
levels, so a rate cut in January is a given now," said Sandip
Sabharwal, CEO-PMS, Prabhudas Lilladher, referring to an action
that was imminent.
    Now the key thing is to watch whether the RBI thinks out of
the box and cuts rates in December itself, added Sabharwal.
    The benchmark BSE index rose 0.46 percent, or 87.99
points, to end at 19,317.25, but ending 0.55 percent lower for
the week. 
    The broader NSE index rose 0.48 percent, or 28.10
points, to finish at 5,879.60, although still down 0.47 percent
for the week. 
    Stocks in rate-sensitive sectors such as banks and real
estate led the gainers on rising hopes the RBI would move
towards easing interest rates starting early next year.
    ICICI Bank gained 1.32 percent, while State Bank of India
 ended 2.55 percent higher. 
    In the real estate sector, DLF rose 1.35 percent
while D B Realty gained 4.56 percent.
    Tata Motors Ltd rose 1.46 percent, up for a second
day, after its key Jaguar Land Rover subsidiary reported
higher-than-expected sales at 34,649 vehicles in November.
 
    Capital goods maker, Larsen & Toubro gained 1.46
percent after the Indian cabinet approved the creation of a
special panel on Thursday to speed up the implementation of
big-ticket infrastructure projects.  
    Fertiliser shares gained after the government approved a new
policy to encourage investment in urea manufacturing, in a move
seen expediting $6.5 billion in projects that have been held
back.  
    National Fertilizers Ltd rose 2.1 percent,
Rashtriya Chemicals and Fertilizers Ltd gained 2.3
percent, while Chambal Fertilisers and Chemicals ended
0.8 percent higher. 
    However, among stocks that declined, Hindustan Unilever
 fell 0.6 percent, extending declines for a third day,
on concerns that it may face higher royalty payments to its
parent Unilever Plc. 
    Indian drugmaker Cipla fell 0.96 percent, down for
a fourth day on profit-taking after it touched an all-time high
of 423 rupees on Dec. 11.
    
   For additional stocks on the move double click        
     
   FACTORS TO WATCH                                             
* Yen slips to 9-mth low ahead of Japan election          
* Brent rises toward $109 as China data points to recovery 
* Euro, shares edge higher ahead of PMI data         
* Foreign institutional investor flows          
* For closing rates of Indian ADRs                       
                       
   ASIA-PACIFIC STOCK MARKETS:                                  
Pan-Asia........ Japan.......   S.Korea... 
S.E. Asia.......        Hong Kong...  Taiwan.... 
Australia/NZ....        India.......  China..... 
                        
   OTHER MARKETS:                                               
Wall Street ....         Gold ....... Currency.. 
Eurostocks.....         Oil ........  JP bonds... 
ADR Report .....       LME metals. US bonds.. 
Stocks News US.. Stocks News Europe     
                       
   DIARIES & DATA:                                              
Indian Data Watch   Asia earnings diary 
U.S. earnings diary     European diary       
Indian diary          Wall Street Week Ahead  
Eurostocks Week Ahead                                   
                         
   TOP NEWS:                                                    
   For top Asian company news, double click on:       
   U.S. company news  European company news  
   Forex news        Global Economy news  
   Technology news  Telecoms news        
   Media news       Banking news           
   Politics/General    Asia Macro data      <ECONASIA 

 (Editing by Anand Basu)
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