Indian shares snap two-day fall

Indian shares snapped a two-day fall and ended 0.24 percent higher on Monday as a drop in global crude oil prices eased worries over the impact of high domestic inflation. Financials led the gain, with leading lenders State Bank of India, ICICI Bank and HDFC Bank rising between 0.2 and 1.04 percent. The sectoral index, ended up 0.67 percent.
However, investors remained wary ahead of a government decision this week on prices of diesel and cooking gas. A government panel is expected to meet on Thursday to decide on raising prices of diesel and cooking gas, which could add to woes on high inflation and dent profit margins of companies already reeling from higher input and interest costs.
Headline inflation in April was at 8.66 percent and the central bank, which has raised interest rates nine times since mid-March 2010, is expected to again increase rates on June 16 when it reviews policy.
"There was some buying at lower levels and a drop in oil prices is also boosting sentiment," K.K. Mital, head of portfolio management services at Globe Capital said. Brent crude slipped toward $115 a barrel on Monday as concern about demand ahead of a key Opec meeting later this week weighed on the market.
"With oil prices down and with the prospect that they will remain soft, the market is getting into the conviction that high inflation is towards the end and will soon peak out," Gajendra Nagpal, CEO of Unicon Financial said. The main 30-share BSE index closed up 0.24 percent, or 43.63 points, at 18,420.11, with 13 of its components advancing. The index is down 10 percent year-to-date. The 50-share NSE index rose 0.28 percent to close at 5,532.05 points.
In the broader market, 816 declines were ahead of 594 gainers on a volume of 399.8 million shares. Foreign funds bought shares worth $270 million last Thursday, latest data from the market regulator showed, but are net sellers of $1.5 billion in May. Top carmaker Maruti Suzuki, which posted its slowest sales growth rate in more than two years in May, fell 0.15 percent after it said production was disrupted at its plant in the northern state of Haryana after workers went strike on Saturday.
Utility vehicles maker Mahindra and Mahindra fell 1.7 percent on concerns of a demand slowdown. Standard Chartered, the only listed Indian depository receipt, fell as much as 19.9 percent to its lowest level since its market debut in June last year, on selling by foreign portfolio investors, traders said.
India's market regulator said late on Friday only "infrequently traded" Indian depositary shares would be allowed to be converted into the underlying shares of an issuer. Standard Chartered's Indian shares, which are frequently traded, would therefore not be converted into underlying shares of the British bank even after the completion of the one year time limit on June 11, analysts said.