Indian shares spring back

Indian shares snapped a three-day slide on Tuesday as investors bet the central bank 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 Reserve Bank of India 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 percent, or 132.16 points, at 16,002.51, after falling nearly 6 percent over the past three sessions. The 50-share NSE index ended up 0.76 percent at 4,800.60.
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. In the broader market, losers led gainers 868 to 551 on total volume of 561.2 million shares.