By Manoj Dharra
MUMBAI, June 5 (Reuters) - Indian shares edged higher for a
second consecutive session on Tuesday as continued hopes for
rate cuts boosted banks, while infrastructure shares such as
Larsen & Toubro rose on optimism for a revival in stalled
Broader gains in indexes were partly capped as telecom
stocks such as Bharti Airtel fell ahead of a
government meeting on Tuesday to tackle the base price for an
upcoming 2G airwave auction.
However, Indian shares are vulnerable to more volatility,
analysts warned, especially ahead of an emergency meeting of G7
countries finance chiefs about the euro zone debt crisis later
in the day.
Meanwhile, despite rising optimism the Reserve Bank of India
will cut interest rates, those expectations could easily be
knocked back depending on inflation and industrial output data
due out next week.
"Before the G7 meeting the market is in a wait and watch
mode," Jagannadham Thunuguntla, head of research at SMC
Investments and Advisors Limited.
"Post that, market will not recover much because ultimately
only one thing can drive the market, which is growth that is
India's main 30-share BSE index rose 0.2 percent
higher at 16,020.64 points on, marking another session of mild
The broader 50-share NSE index rose 0.31 percent to
Expectations for interest rate cuts are rising, as falling
oil prices as well as weak growth in India are seen giving the
Reserve Bank of India room to cut interest rates.
A Reuters poll on Tuesday showed 15 out of 20 analysts
expect a rate cut at the RBI's meeting on June 18.
These hopes boosted banks for a second session, sending the
NSE banking index up 1.05 percent, for a combined
gain of 2.1 percent so far this week.
Top lender State Bank of India rose 1.8 percent,
while HDFC Bank gained 1.2 percent.
Infrastructure stocks gained on newspaper reports India's
Prime Minister Manmohan Singh had called for a meeting of
various government officials on Wednesday to discuss ways to
kickstart stalled infrastructure projects.
Engineering and infrastructure firm Larsen and Toubro
rose 3.2 percent, while Bharat Heavy Electrical Ltd
added 1.82 percent.
However, among decliners, Bharti Airtel shares
fell 2.5 percent as the overhang continued from the pricing for
an upcoming 2G airwave auction ahead of a government meeting on
The auction follows a Supreme Court order to revoke all
permits awarded in the scandal-tainted 2008 sale.
Reliance Communications fell 1.12 percent while
Idea Cellular shares ended down 0.46 percent.
Shares in India's Mphasis fell 5.7 percent, but
that was after quickly paring an earlier fall of as much as 13.3
percent, after it denied entering into any transaction that
would require it to leverage its cash position and incur more
The Indian Indian software and back office provider had
earlier tumbled on market talk it would have to incur costs of
35 billion rupees ($630.29 million) to implement a government
contract to run the software for some ATM machines across
several Indian states.
FACTORS TO WATCH
* Euro falls as minister spotlights Spain funding worry
* Brent crude falls below $98, euro zone weighs
* Euro zone crisis talks lift risk assets
* Foreign institutional investor flows
* For closing rates of Indian ADRs
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