Indian shares up 0.4 pct; Bharti gains 0.5 pct

Published: 02 Aug 2009 22:18:09 PST

* Steady Asia mkts, upbeat econ data lift sentiment

* But profit-taking emerges after recent rally

* Reliance, Larsen & Toubro, Sterlite among major gainers

* Hindustan Unilever, HDFC Bank fall (Updates to mid-morning)

MUMBAI, Aug 3 - Indian shares climbed 0.4 percent on Monday, as a spate of strong corporate results across the world over the past few weeks and encouraging data boosted hopes for an economic recovery and lifted markets in Asia.

Top telecoms firm Bharti Airtel <BRTI.BO> rose 0.5 percent to 412.50 rupees after the firm extended exclusive merger talks with South Africa's MTN <MTNJ.J> by a month to Aug. 31. A posible deal would create the world's third-largest mobile operator. [ID:nBMA000005]

Energy giant Reliance Industries <RELI.BO>, which has the most weight in the main index, was another major gainer, climbing 1.3 percent to 1,983 rupees.

Engineering and construction firm Larsen & Toubro <LART.BO> advanced 0.5 percent to 1,514.80 rupees after it won two contracts from state-run Oil & Natural Gas Corp <ONGC.BO> totaling over 53 billion rupees ($1.1 billion).

But trading was choppy as investors looked to take profits after the market rose to its highest close in 13 months in the previous session.

Growth in India's manufacturing activity held steady in July amid robust local demand and a slight rebound in exports, but intense competition curbed companies' pricing power even as raw material costs jumped, a survey showed. [ID:nSGP000036]

The benchmark has jumped 16 percent over the past three weeks, riding a global equities rally and as a majority of the companies in the index reported better-than-expected quarterly earnings.

"Investors have seen most of the quarterly reports and are now digesting these results and taking positions accordingly," Avinash Gupta, assistant vice president of equity research at Bonanza Portfolio, said.

"But they are more in a hurry to exit if they get the chance than those looking to enter the market now."

The main index has leapt 95 percent from a 2009 low in early March, and is up 62 percent -- the third-best performance among major indices tracked by Reuters -- this year after slumping by more than half in 2008.

This has sparked concerns about pricey stocks, with the 30 shares in the BSE index trading at around 17.5 times one-year forward earnings -- lower than stocks in the main indexes in Shanghai and Hong Kong, but well above levels in Brazil, Russia, South Korea and Indonesia.

Though companies reported strong earnings, revenue remained subdued amid weak demand and analysts cautioned that inflationary pressures in the coming quarters could erode cost benefits that have aided earnings. [ID:nDEL538693]

But a rush of liquidity pouring into equity markets after governments across the globe pushed stimulus measures to boost flagging economic growth will limit any correction, traders said.

Non-ferrous metals firm Sterlite Industries <STRL.BO> gained 2.6 percent to 661.80 rupees as copper prices hit a 10-month high on Monday.

However, consumer-goods firm Hindustan Unilever <HLL.BO> fell 2.4 percent to 284.35 rupees, while private-sector lender HDFC Bank <HDBK.BO> slid 1.6 percent to 1,476 rupees on Monday.

In the broader market, gainers led losers 1,329 to 967 on relatively moderate volume of 140.8 million shares.

The 50-share NSE index <.NSEI> was up 0.4 percent at 4,656.40.

Most Asian shares were higher on Monday, with MSCI's measure of Asian markets other than Japan <.MSCIAPJ> rising 0.8 percent. Japan's Nikkei <.N225> was flat after closing at a 10-month high in the previous session.

Brokerage CLSA's China purchasing managers index rose to a one-year high of 52.8 in July, confirming official PMI data over the weekend that indicated an expansion in manufacturing, while U.S. gross domestic product numbers on Friday showed the world's largest economy shrank by less than expected in the second quarter. [ID:nBJB000642] [ID:nN30365410]

MAIN TOP 3 BY VOLUME

* Unitech <UNTE.BO> on 8.4 million shares

* IG Petrochemicals <IGPT.BO> on 4.2 million shares

* Ispat Industries <ISPT.BO> on 3.8 million shares

STOCKS ON THE MOVE

* Indian Hotels <IHTL.BO> fell 1.1 percent to 67.50 rupees after the owner of the Taj luxury chain posted a 73.2 percent fall in net profit in the June quarter.

* Wind-turbine maker Suzlon Energy <SUZL.BO> dropped 5.4 percent to 94.35 rupees after the company on Saturday posted a consolidated net loss in April-June, against a profit a year earlier.

* Phoenix Mills <PHOE.BO> rose 8.3 percent to 128 rupees after 3.44 million shares, or 2.37 percent of its equity, changed hands in a block deal on the Bombay Stock Exchange.

FACTORS TO WATCH * For technical analysis double click on www.reutersindia.net * Indian rupee rises to 1-mo high tracking weak dlr [INR/] * Indian bond yields in narrow range; supply a worry [IN/] * Dollar near lowest this year, U.S. data eyed [FRX/] * Oil rises above $70 on econ hopes, stocks rally [O/R] * Asia recovery lifts stocks, hits dollar [MKTS/GLOB] * S&P eyes 1,000; could be ripe for retreat

[.N] * For closing rates of Indian ADRs

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