BSE Sensex rises 0.2 pct; Reliance Industries drops again

People walk pass the Bombay Stock Exchange (BSE) building displaying India'...

The BSE Sensex eked out a 0.2 percent gain on Thursday in choppy trade with investors mostly adjusting positions on the last day of monthly derivatives contracts on the National Stock Exchange.

Better monsoon prospects and firm regional bourses helped the market log gains, but mixed earnings reports and the possibility of more rate increases by the central bank were concerns.

"Apart from the monsoon, there are no good news to drive the market higher," said Jigar Shah, vice-president of equity sales at Motilal Oswal.

The annual four-month monsoon rains, which are vital for India's trillion-dollar economy were 38 percent higher than normal in the week to July 28, the weather office said, bouncing back from a 17-percent deficit in the previous week.

An Indian central bank official said current policy rates would not tame inflation and aggressive action was needed, two days after it raised rates more sharply than expected and adopted a hawkish tone.

The 30-share BSE index closed up 0.19 percent, or 34.63 points, at 17,992, with 17 of its components advancing.

DLF Ltd<DLF.BO> dropped 0.8 percent after the largest listed property developer's 3.8 percent rise in quarterly profit failed to cheer investors.

An up to $211 million follow-on share sale by state-run Engineers India was subscribed 4.8 times by 0930 GMT, exchange data showed, with most of the bids at the lower end of the 270-290 rupees price band.

The issued opened on Tuesday and closes on Friday.

For the year to date, the benchmark BSE index has risen 3 percent, outperforming Asian shares other than Japan that has dropped 1.9 percent and emerging markets index which gained 0.2 percent.

For a graphic on BSE index's performance vs broader indexes, click http://graphics.thomsonreuters.com/gfx1/SBrb_20102907104315.jpg

The rise has largely been driven by foreign buying of $9.2 billion so far in 2010.

RELIANCE AT 7-WK CLOSING LOW

Reliance Industries<RELI.BO>, which has the most weight on the index, dropped 1 percent to 1,010.45 rupees -- its lowest close in seven weeks as the energy major extended losses for a second day on concerns over delay in ramp up of gas production at its KG-D6 block off India's east coast.

"There is nothing exciting about the counter right now. What generally used to be a hot pick is avoided for now," said Shah.

The stock had fallen 3.1 percent in the previous session after brokerages gave a thumbs down on the gas output delay worries.

Those fears were reinforced after the oil secretary said late on Wednesday Reliance would be able to pump natural gas at full capacity from its deep-sea field only during the year to March 2013, indicating a delay of almost two years.

Kunal Sukhani, manager of institutional equities at Asian Markets Securities, said a lot of short positions in the stock was rolled over, indicating a bearish outlook.

Thursday was the last day for monthly derivatives on the National Stock Exchange.

BANKS UP

Banks shrugged off rising trend in rates and climbed on hopes robust economic growth will boost demand for loans.

ICICI Bank and HDFC Bank rose 1.9 percent and 0.7 percent respectively, while sector leader State Bank of India gained 0.1 percent.

Mortgage lender Housing Development Finance Corp rose 2.8 percent.

Top engineering and construction firm Larsen & Toubro fell for the fourth straight session and closed 0.3 percent lower on outlook concerns.

"In view of the expected pressure on the company's sales in FY11 due to lengthening execution cycle of its current order backlog, as well as considering the stock's rich valuation, we reiterate our rating of underperform on L&T," First Global said in a note.

Leading motorcycle maker Hero Honda rose 0.9 percent ahead of its June quarter results. A Reuters poll forecast net profit probably rose 19.4 percent.

State-run explorer Oil & Natural Gas Corp, which also releases results later in the day, closed 1.1 percent lower. According to a Reuters poll, it is expected to report quarterly net profit slipped 12.1 percent.

In the broader marker, declining shares almost equalled advancing ones on relatively moderate volume of 358 million shares.

The 50-share NSE index rose 0.2 to percent to 5,408.90.

The pan-European FTSEurofirst 300 index of top shares was up 0.5 percent at 1030 GMT, while the MSCI's measure of Asian markets other than Japan gained 0.4 percent.

(For more business news on Reuters India click http://in.reuters.com)

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