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Sensex Ends Up 0.2%, Autos Hit Record High

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The BSE Sensex edged higher on Wednesday as auto makers advanced on hopes for lower costs for vehicle loans after the central bank cut interest rates, but doubts about future monetary easing led to profit-taking in recent out-performers.

Indian markets face a number of challenges ahead, including worries that high oil prices and big borrowing plans from the government could prevent inflation from falling too much at a time when growth is slowing.

That could prevent continued gains in India's main indexes, after the main BSE index edged up enough on Wednesday to book its highest close since April 4.

"We don't know when the next interest rate cut is going to happen," said Sandeep J Shah, CEO of Sampriti Capital, adding that markets would now focus on earnings results, among other factors.

India's main 30-share BSE index pared earlier gains to end up just 0.2 per cent at 17,392.39 points, while the broader 50-share NSE index rose 0.19 per cent at 5,300 points.

Auto makers helped keep the indexes in the black, with a BSE sub-index rising to an intraday record high on hopes that the cost of purchasing a vehicle will come down, boosting sales.

These expectations rose after the central bank cut the repo rate by a more-than-expected 50 basis points on Tuesday.

Car sales in India rose just 2.2 per cent in the fiscal year that ended in March, marking a three year low.

Tata Motors rose 2.7 per cent, after earlier hitting a record high of Rs 311.25.

Shares were also helped after brokerage Sharekhan said the auto maker's $490 million zero coupon convertible bonds were "in the money" for investors, saving Tata potentially costly redemption payments.

Bajaj Auto ended 2.6 per cent up, while Mahindra and Mahindra rose 1.14 per cent.

Also among gainers, HDFC Bank added 1.4 per cent after it posted a better-than-expected 30.3 per cent profit surge in its latest quarter, and after predicting stronger credit growth and lower provisioning for loan losses.

Shares in cement majors Ambuja Cements gained 2.9 per cent, while ACC added 3.4 per cent, on optimism they will report solid earnings results on Thursday.

But some of the recent out-performers fell. ITC lost 1.9 per cent, on profit-taking after a 10 per cent rally in the last six sessions, a winning run that outperformed the 1.06 per cent gain in NSE index during that period.

Also falling, Exide Industries lost 5.2 per cent after the company cut prices for some of its batteries, which traders saw as a measure intended to sacrifice profit margins by boosting sluggish sales.


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