Indian shares edged 0.3 percent higher on Monday, tracking world equities as risk appetite returned after Greece avoided an early default and on signs China's economy was not heading towards a sharp slowdown, but traders maintained a cautious view. Energy major Reliance Industries was among the biggest gainers, with a 0.8 percent rise, after falling 4.1 percent on Friday.
The retail subsidiary of the conglomerate has appointed two former Wal-Mart executives to run the operations, the Economic Times reported on Monday, ahead of an expected opening up of the retail sector. The 30-share BSE index firmed 0.28 percent, or 51.68 points, to 18,814.48 points, extending last week's 2.9 percent gain. Nineteen of its components closed in the green.
The 50-share NSE index gained 0.4 percent to end at 5,650.50. Gainers thrashed losers in the ratio of 2.1 to 1 on the NSE, on a volume of 549 million shares, lower than the 90-day daily average volume of 589 million shares. "We have run the upward course, and a correction looks due," said Arun Kejriwal, director of research firm KRIS.
Traders said a revival in foreign fund buying underpinned India - one of the world's worst performing major markets this year- in the last few sessions, but profit booking could come in now. "People are waiting for first-quarter results. Any spike on good news will be used to sell," Kejriwal said. Investors massively returned to emerging market equity funds in the week ended June 29 as hopes that Greece would avoid imminent bankruptcy encouraged risk taking, fund tracker EPFR Global said on Friday.
Inflows into their funds hit a 12-week high during the week, after three consecutive weeks of outflows, according to the fund-tracker. Data from Nomura showed foreigners preferred Indian equities the most in Asia in the week to July 1, and pumped in $1.1 billion. Top-listed real estate firm DLF jumped 6 percent to 233.60 rupees, after RBS upgraded the stock to "buy" from "sell" and raised its target price, citing improving cash-flow and a ramp-up in sale of its non-core assets.
"We believe the worst is over for DLF and expect a gradual recovery," RBS analysts said in a note late on Friday. The banking sector index rose 1.1 percent, attempting to cover up for a poor show so far this year. It is still down 3.5 percent in 2011. Leading lenders State Bank of India, ICICI Bank and HDFC Bank gained between 0.5 percent and 1.2 percent.
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