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Sensex Edges Higher In Countdown Ahead Of Budget

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The BSE Sensex edged higher on Monday, 18 February, 2013, marginally recovering after hitting their 2013 lows in the previous session, as recent underperformers such as Larsen & Toubro rose, while DLF gained after an executive told analysts earnings would improve.

Shares are expected to be range-bound until the 2013/14 budget is unveiled on February 28, in a critical test of whether the government will announce a plan to contain the fiscal and current account deficits.

The finance minister plans to cut the public spending target for fiscal 2013/14 by up to 10 per cent from this year's original target, government sources told Reuters, in what would be the most austere budget in recent history as he tries to avert a sovereign credit downgrade.

Such a plan could spark gains in domestic shares. After surging 25.7 per cent in 2012, the Sensex has stalled and is up only 0.38 per cent so far this year.

"Earnings season has been not bad but not good either, and now eyes are on budget which has to be responsible as exports are not looking good," G. Chokkalingam, executive director and chief investment officer, Centrum Wealth Management, said.

"You are dependent only on FII money to support current account deficit, so finance minister has to favour markets and economy, there is no other choice," he added.

Sensex rose 0.17 per cent, or 32.93 points, to end at 19,501.08, recovering from its lowest close since December 31, 2012,  hit on Friday.

The broader NSE Nifty rose 0.18 per cent, or 10.80 points, to end at 5,898.20.

The gains were led by a pick-up in shares where selling was seen as overdone. Larsen & Toubro Ltd gained 1.7 per cent after having fallen 6.35 per cent as of Friday's close.

State Bank of India gained 1.3 per cent. Its shares have fallen 8.4 per cent so far this month as on Friday's close,  after Oct-Dec earnings disappointed.

Among other gainers, shares in DLF Ltd rose 5 per cent, after vice chairman Rajiv Singh indicated earnings would  improve and said net debt would fall, according to analysts who attended the company's post-results analyst meeting on Friday.

Public sector companies MMTC Ltd and Hindustan Copper Ltd gained 8.2 per cent and 3.7 per cent
respectively on hopes of good demand in the upcoming stake sales by the government.

The government is yet to provide a time frame for the stake sales.

India will allow wireless broadband airwave holders to provide voice services if they pay an additional $306 million, a senior government official said on Monday, a move likely to boost billionaire Mukesh Ambani's Reliance Industries Ltd.

Reliance shares ended 0.2 per cent higher.

However, Jet Airways fell 7.65 per cent, a day after the chairman of Etihad Airways said the Abu Dhabi-based carrier needed to revise the terms of a pending deal to buy a stake in the Indian airline.

Tata Consultancy Services Ltd fell 1.16 per cent and Infosys Ltd shares ended 0.3 per cent lower on profit taking. They had gained in the previou session on hopes earnings will look up in fiscal 2014 on the back of an improving global economy.