By Tanvi Mehta
(Reuters) - Indian shares rose over 1 percent on Wednesday to a near two-week high before paring gains, unable to play catch-up with global markets, as liquidity concerns dragged down non-banking financial stocks.
Indian markets have been facing a liquidity crunch with a depreciating rupee and higher oil prices. And, the recent string of defaults by non-banking financial firms on debt repayment has compounded worries.
"We should have followed how global markets behaved, but it is more to do with the sell-off. FIIs (foreign institutional investors) are selling regularly after a break of a day... All financials are getting hit badly, liquidity is again becoming tighter," said AK Prabhakar, head of research at IDBI Capital.
Foreign investors had net sold $2.59 billion worth of equities this month as of Tuesday, compared with a net sale of $1.49 billion last month.
The rally from 10,138 points to 10,710 points is just a pull-back one, Prabhakar added.
The broader Nifty was up 0.22 percent at 10,608.40 as of 0537 GMT, boosted by ITC Ltd and Reliance Industries Ltd, after rising 1.2 percent earlier in the session.
The benchmark Sensex was 0.41 percent higher at 35,305.18, after gaining 1.3 percent in the first half hour of trade.
Both indexes were up for a fourth consecutive session.
Reliance Industries gained 1.3 percent to a near two-week top ahead of quarterly results due after market hours. The energy conglomerate is expected to report a higher profit for the September quarter, according to I/B/E/S data from Refinitiv.
Shares of Infosys Ltd rose up to 3.8 percent after the company posted a better-than-expected profit for the September quarter. The company maintained its forecast for revenue growth, but some brokerages remained concerned.
Hero MotoCorp Ltd gained over 3 percent as the management was confident of demand going forward even after the world's largest two-wheeler maker posted a fall in quarterly profit.
Indiabulls Housing Finance Ltd was the top percentage loser on the NSE index, shedding 8.9 percent. Dewan Housing Finance Corp and Repco Home Finance Ltd fell over 8 percent each.
(Reporting by Tanvi Mehta in Bengaluru; Additional reporting by Gaurav Dogra; Editing by Subhranshu Sahu)
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