mumbai 08 23, 2012, 17:40 IST
The BSE Sensex ended flat on Thursday, as investors booked profits on Reliance Industries due to worries about lower refining margins, although software service exporters such as Infosys gained on hopes for more U.S. monetary stimulus.
The initial boost in Asian stock markets after minutes from the latest Federal Reserve meeting signaled a move towards steps to boost the U.S. economy, came undone later as weak economic data, including falling manufacturing in China, raised concerns.
Shares have gained this month to five-month highs, with the benchmark BSE index rising 3.5 percent.
However, analysts question whether markets can sustain these gains given the absence of any meaningful announcements from the government on policy reforms, while the European Central Bank has yet to buy euro zone debt.
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"We believe the market may not keep moving higher. It will hover around 5,400 for some time, unless there are major positive events like FDI or a hike in diesel prices" Sudip Bandyopadhyay, MD & CEO, Destimoney Securities Pvt Ltd, referring to potential government policy steps.
"India getting downgraded remains a risk. On global front if ECB starts buying Euro bonds, it will spark enthusiasm as well."
The BSE Sensex fell 0.02 percent to end at 17,850.22 points. The Nifty gained 0.05 percent to end at 5,415.35 points.
Reliance Industries
Despite the falls on Thursday, Reliance shares are still up 6.8 percent for the month.
Brent crude futures rose by more than a dollar on Thursday to top $116 a barrel on hopes for additional U.S. monetary stimulus.
Other recent outperformers fell with Tata Motors
However, software services exporters gained on hopes Fed's measures would improve the outlook of the key U.S. market.
Infosys
The NSE's gauge of IT stocks <.CNXIT> has risen 9 percent in August, outperforming the 3.56 percent gain in the broader NSE <.NSEI> index.
Drug makers gained after HSBC raised the target prices for some Indian drug makers saying "robust" earnings will help sustain the "premium" valuations in the sector.
Ranbaxy Laboratories
HSBC raises its target price for Sun to 770 rupees from 670 rupees and Ranbaxy to 482 rupees from 472 rupees.
Consumer goods companies rose after Credit Suisse initiated coverage of the sector with "outperform" ratings, saying price-to-earnings premiums are "high", but "far from the peak", while adding earnings growth are "steady.
Cigarette maker ITC
Shares in Hindustan Zinc
Barclays Capital said Vedanta will not pay more than $3.4 billion for the government's 29.5 percent stake in Hindustan Zinc, or 149 rupees per share, a 14 percent premium over Wednesday's closing price.