Sensex up 1.2 pct; traders worried about FII selling

By Abhishek Vishnoi

MUMBAI (Reuters) - The BSE Sensex rose more than 1 percent on Thursday, recovering from two sessions of falls, as ITC surged following reports of a price hike for one of its cigarette brands, while blue-chips such as Tata Motors recovered from previous declines.

The bounce-back was also helped by higher global shares as investors put concerns about Portugal's political turmoil to one side ahead of the ECB and Bank of England's monthly meetings later in the day and Friday's key U.S. jobs report.

However, traders are worried as foreign institutional investors (FIIs) have sold index futures worth 8.6 billion rupees in the previous two sessions, as per exchange and regulatory data.

 

Foreign investors also sold cash shares worth 7.05 billion rupees on Wednesday.

"Rupee trend, FII outflows are not comforting, so in the short term I would be not be surprised if a correction comes," said Paras Adenwala, managing director and principal portfolio manager at Capital Portfolio Advisors.

The BSE Sensex rose 1.22 percent, or 233.08 points, to end at 19,410.84.

The Nifty rose 1.14 percent, or 66.05 points, to end at 5,836.95, closing above the psychologically important 5,800 level.

ITC gained 3.8 percent after dealers said the company raised the price of its Gold Flake Regular Filter cigarettes.

ITC officials were not immediately available for comment.

Among blue-chips, Tata Motors rose 2.9 percent, recovering from a 1.9 percent fall in the previous two sessions while Reliance Industries ended 1.3 percent higher.

Infosys rose 2.6 percent on value buying after slumping 3.8 percent so far this week as of Wednesday's close, underperforming a 1.2 percent fall in the Nifty during the same period.

Infosys fell earlier this week on continued worries about its fiscal 2014 revenue guidance after Morgan Stanley said on Monday the company may cut its fiscal 2013/14 revenue outlook to a growth of 4-6 percent, from the 6-10 percent growth it had forecast in April.

Shares of midcap state-run banks gained as investors reduced short positions in futures after recent falls, dealers said.

IDBI Bank shares rose 2.2 percent and Indian Overseas Bank gained 1.6 percent, while Andhra Bank ended 1.2 percent higher.

Bata India rose 2.6 percent after Nomura initiated coverage of the stock with a "buy" rating and a target price of 990 rupees, saying the stock is "the best way to play the growth of the Indian footwear industry over the long term."

Shares in business process outsourcing provider Firstsource Solutions surged 19.6 percent, its maximum daily limit, after 5.14 percent of its equity changed hands in five block deals on the NSE.

Bharti Airtel rose 2.2 percent after India's largest telecommunications carrier raised its stake to 51 percent in a wireless broadband venture founded by Qualcomm Inc , the Indian company said on Thursday.

However, among stocks that fell, Bajaj Auto slipped 0.7 percent as the strike at its Chakan plant continued, causing a production loss of about 20,000 motorcycles for June.

(Editing by Sunil Nair)