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Sensex Regains 16k Level; Up 132 Pts On Value Buying

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Erasing intra-day losses, the Bombay Stock Exchange benchmark Sensex on Tuesday regained the 16k mark, moving up 132 points on fag-end value buying after three-day fall on investor hopes of a pause in interest rate hikes.

The Sensex, which had lost 1,007 points in the last three straight sessions, gained 132.16 points, or 0.83 per cent to 16,002.51, after touching the day's low of 15,771.59.

The broad-based National Stock Exchange index Nifty rose 36 points or 0.76 per cent to 4,800.60, after touching the day's low of 4,728.50.

Initially, the market declined following a weak trend in Asia but strong openings in Europe helped the uptrend.

Brokers said that last 30-minute rally was backed by value-buying in fundamentally strong stocks, following 6 per cent fall in the last three days.

They said investors also bought on expectations that in view of sharp decline in industrial growth and the slowing economy, RBI may pause hike in interest rates at its meeting on Friday. The Reserve Bank has raised its lending rates 13 times since March 2010 to curb inflation, making consumer and corporates costly.

The rally was led by Reliance Industries and Infosys, which spurt 2.02 per cent and 0.86 per cent. The two carry about 20 per cent Sensex.

Bajaj Auto, Hero MotoCorp, M&M, Jindal Steel, SBI, HDFC Bank, Tata Steel, Bharti Airtel, NTPC, Sterlite Industries, Sun Pharma and BHEL were the other major gainers.

The BSE Sensex snapped a three-day slide on Tuesday as investors bet the Reserve Bank of India (RBI) will indicate a shift in its inflation-focused policy stance to support growth after industrial output shrank for the first time in more than two years.

The RBI is widely expected to pause its tightening cycle when it reviews policy on Friday, after raising interest rates 13 times since early 2010 to fight stubborn inflation.

"There are high expectations that the credit policy will at least signal an interest rate reduction, if not an actual reduction," said Deven Choksey, chief executive and managing director of brokerage K.R. Choksey.

The 30-share BSE index, or Sensex, closed up 0.83 per cent, or 132.16 points, at 16,002.51, after falling nearly 6 percent over the past three sessions.

The outlook for the benchmark, which is one of the world's worst performers this year having lost 22 percent, remains bearish.

"We saw a minor recovery because of a technical pullback," said Alex Mathews, head of research at Geojit BNP Paribas Financial Services.

"However, fundamental macro indicators are still giving a negative outlook for the market in the medium term. Going forward we may see further downfall," he said.

Energy major Reliance Industries, which has the heaviest weight on the main index, rebounded 2 percent and led the gains. The stock, however, is down 29.8 percent this year on falling gas output from its fields off India's east coast.

Software services bellwether Infosys, which gets more than half its revenue from the United States, rose 0.4 percent as a slump in the rupee to record lows was seen as boosting the company's earnings.

The rupee fell to as low as 53.52 to the dollar, taking losses to about 18 percent from its year-high in July, on worries shrinking domestic factory output and Europe's debt crisis could dampen risk appetite.

Data on Monday showed October industrial output slumped 5.1 percent, the first drop in more than two years, building pressure on the central bank to ease monetary or liquidity conditions.

On Friday, India slashed its full-year growth forecast amid slowing domestic and global demand and officials warned the government was facing a serious balance of trade problem.

Engineering conglomerate Larsen and Toubro, which could be hit by a slump in capital goods investment, fell 2.1 per cent.

In the broader market, losers led gainers 868 to 551 on total volume of 561.2 million shares.

The 50-share NSE index ended up 0.76 percent at 4,800.60, while the MSCI's broadest index of Asia Pacific shares outside Japan was down 1.11 percent by 1054 GMT.

(Reuters)


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