MUMBAI: The BSE Sensex rose 0.9 percent on Tuesday, led by Reliance Industries and ITC, after a rally across world markets helped calm investor nerves and shrug off a seesawing morning session.
Moves by Australia and Japan to support their ailing economies set the stage for a rebound across markets in Asia and Europe, but traders were cautious about the outlook for Indian stocks.
The ruling coalition government, which faces general elections in April-May, is scheduled to unveil an interim budget on Feb. 16, but expectations are muted as the authorities will have to borrow heavily to pursue spending.
Energy major Reliance Industries, which has the heaviest weight in the main index, rose 2 percent to 1,302.55 rupees as investors expected gas sales to help the company.
A court last week allowed Reliance to sell gas from its KG fields off India's east coast, pending judgement in a contract dispute case with another firm.
Top bus and truck producer Tata Motors fell 6.4 percent to 133.50 rupees after it reported a 33 percent drop in January sales.
The 30-share BSE index closed up 0.91 percent, or 82.60 points at 9,149.30. It swung widely after opening higher and then falling 0.3 percent before bounding up as much as 2.6 percent.
K.K. Mital, head of portfolio management services at Globe Capital, said higher markets in Asia and Europe helped sentiment but volume was below average underscoring a soft underbelly.
World stocks and oil ticked higher as Australia slashed rates by 1 percentage point and unveiled a $26 billion stimulus, while the Bank of Japan said it would buy up to $11 billion of shares held by banks.
The US Senate is due to begin a series of votes on $900 billion in tax cuts and new spending.
Gains in India were held in check by a grim economic outlook. Exports in January are expected to plummet an annual 22 percent to about $11.5 billion as the global slowdown cuts sharply into demand for Indian goods, a top official said on Tuesday.
"Export growth will not even be 5 percent this fiscal year. It could be around $170 billion," Commerce Secretary G.K. Pillai, told reporters on the sidelines of conference, referring to the total size of exports in 2008/09.
Asia's economies, which have been hit hard by the financial crisis, could recover next year, the head of the International Monetary Fund said, but warned that the export-dependent continent could not pull through on its own.
Cement companies such as ACC and Grasim rose 5.1 percent and 7.1 percent respectively as their January shipments rose.
Twenty of the BSE index components closed higher while in the broader market, losers led gainers in the ratio of 1.2:1 on moderate volume of 287 million shares.
The 50-share NSE Index ended 0.62 percent higher at 2,783.90 points.
STOCKS THAT MOVED
* DLF fell 13.25 percent after the top listed developer said it plans to raise up to $510 million from private equity in two months and would sell non-strategic assets to raise a similar amount as it looks to shore up against a property slump.
* Fraud-hit Satyam Computer Services shed early gains and closed 6.7 percent lower at 53.75 rupees. India's market regulator said on Monday it would change its rules on open offers to buy shares in firms after an approach from the outsourcer's new board, but gave no timeframe.
* Engineering firm Larsen & Toubro, which is seen as a favourite in the race to buy Satyam, fell 0.6 percent to 657.95 rupees after rising as much as 2.7 percent in early deals.
* Multiplex chain operator PVR Ltd fell 4.2 percent to 85.25 rupees after it said a founder had pledged 2.17 percent, or 500,000 shares, to a bank.
* Essar Oil fell 2.85 percent to 69.90 rupees, after the private sector refiner said it had delayed its expansion plans due to the economic slowdown and would lift capacity to its final target of 680,000 barrels per day a year later than earlier forecast.
MAIN TOP THREE BY VOLUME
* Satyam Computer on 36.6 million shares
* Spice Communications on 35.3 million shares
* Unitech Ltd on 13.2 million shares