Indian shares erased early losses and rose for a second day on Thursday, with sentiment helped by gains in European markets though investors were cautious because of domestic economic concerns and government policy inaction. Banks led the gains in the main index, with sector leader State Bank of India rising 2.9 percent and rival ICICI Bank rallying 3.7 percent.
The main 30-share BSE index closed up 0.82 percent, or 128.15 points at 15,813.36, with 22 of its components rising, after dropping 1.35 percent at one stage. The 50-share NSE index rose 0.87 percent to 4,733.85. In the broader market, gainers led losers 864 to 576 on total volume of about 573 million shares.
Telecom carriers Bharti Airtel fell 1.8 percent and Idea Cellular shed 1.3 percent after a source said the government had decided to not allow pacts between companies to offer 3G services beyond their licensed zones through roaming agreements. The benchmark index had snapped a 5-day slide and rebounded 3.4 percent on Wednesday, but the outlook remains clouded by slowing growth and foreign fund outflows. The index is down nearly 23 percent on the year.
Foreign institutional investors have been net sellers for eight straight sessions to Tuesday, data from India's capital markets regulator showed. The funds have been net sellers of more than $500 million worth local stocks so far in 2011, a far cry from record net inflows of more than $29 billion in 2010.
The 14-day relative strength index (RSI) of the main index had slumped to 31 at Tuesday's close. A reading below 30 typically indicates oversold conditions. At Thursday's close, it was at 44.6. Infosys closed 0.8 percent lower, while Tata consultancy fell 0.6 percent and Wipro shed 2.4 percent. Energy major Reliance Industries, India's most-valuable firm, reversed early losses and closed 0.9 percent higher. The company said it bought a minority stake in Terra Power, a US-based nuclear-technology design and engineering company.
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