Indian shares edged 0.1 percent higher on Monday, helped by gains in software majors, but Anil Ambani group companies declined after two group firms agreed with the market regulator to not invest in stocks until December 2012. Software majors rebounded from the recent steep decline ahead of sector leader Tata Consultancy Services earnings expected after market hours.
A Reuters poll expects TCS to report a 22.1 percent rise in third-quarter net profit to 21.94 billion rupees. The IT sector index, which is still down 4 percent year-to-date, closed 1.7 percent higher on Monday. TCS, Infosys Technologies and Wipro closed up between 0.7 percent and 2.1 percent.
The 30-share BSE index snapped a two-day decline and gained 0.12 percent, or 21.81 points, to 18,882.25 points in choppy trade, with 13 of its components gaining. Dealers said the sentiment was not yet bullish. Foreign funds have been net sellers for seven sessions till Thursday. They have sold a net of $545 million for the year-to-date, with the benchmark index shedding nearly 8 percent in the period.
"FIIs (foreign institutional investors) have been pulling out some money off late due to a bunch of negative newsflow, including the scams and the parliament deadlock," said Prasanth Prabhakaran, president of retail broking at IIFL. Reliance Infrastructure fell as much as 10.6 percent to 714 rupees, its lowest since May 2009. It closed 7.8 percent lower, while Reliance Power ended down 6.1 percent. Other Anil Ambani Group companies such as Reliance Communications, Reliance MediaWorks and Reliance Broadcast Network closed down between 4.8 percent and 8.5 percent.
Late Friday, the Securities and Exchange Board of India said Reliance Natural Resources, which has been merged into Reliance Power, and Reliance Infrastructure shall not make investments in secondary market listed securities until December 2012 under a settlement reached with the regulator.
"It is a compromise settlement (by Anil Dhirubhai Ambani Group). Had they fought it out, it would have involved more time and the uncertainty and negative perception would have lasted longer," Deven Choksey, managing director and CEO of K.R. Choksey Shares. Larsen & Toubro ended down 1.7 percent after the engineering firm's reported a fall in third-quarter operating margin, even as it beat forecasts with a 10.5 percent rise in quarterly net profit.
Mortgage lender Housing Development Finance Corp gained 3.2 percent, after HSBC raised the stock to "overweight" from "neutral", saying the recent correction in the stock offers an excellent entry point for investors. The stock is still down 9 percent year-to-date. More than two shares declined in the broader market for every share that advanced in low volume trade of 246 million shares. The 50-share NSE index closed barely changed at 5,654.75 points.