* Rate cut hopes underpin sentiment, banks climb
* Satyam up on hopes for moves to raise shareholder
sentiment
* Reliance rises after unit starts giant refinery
(Updates to close)
By Sumeet Chatterjee
BANGALORE, Dec 29 (Reuters) - Choppy Indian shares snapped
a four-day slide and rebounded 2.2 percent on Monday as
investors scooped up beaten down stocks on hopes for a rate
cut, while outsourcer Satyam (SATY.BO) rose in anticipation of
moves to shore up investor sentiment.
Higher European markets and signs of a positive opening in
the United States also helped underpin sentiment, but traders
said it would be difficult to sustain the recovery amid
concerns of dismal corporate earnings caused by a global
downturn.
Montek Singh Ahluwalia, the deputy head of India's Planning
Commission, said lower inflation and slowing economic growth
have created scope for further easing in monetary policy.
Outsourcer Satyam (SATY.BO) leapt as much as 17.8 percent
before ending up 9.4 percent at 148.25 rupees, its sharpest
gain in more than two months, after it said it would consider
more options to improve business practices, including
strengthening governance.
Satyam postponed a board meeting on Monday to Jan. 10 to
give itself more time to consider options to shore up investor
confidence, which was rattled by a botched attempt to buy two
infrastructure firms in which management held stakes and after
news it has been barred from doing business with the World
Bank.
For related stories on Satyam, see [ID:nBOM412356]
The main 30-share main index closed up 2.19 percent, or
204.60 points, at 9,533.52, after having fallen 1.8 percent
early and then rebounding as much as 2.4 percent. Twenty-three
of its components gained ground.
"This is typical bear market rally and no one should read
too much into this. Nothing has changed in terms of the
economic data and corporate earnings outlook," said Daljit
Kohli, head of research at Emkay Global Financial Services.
"We are still in a bearish mode and I expect the market to
touch new lows in the near term before they start moving up."
The BSE index is down 55 percent from its record high hit
in January and off 53 percent so far this year, making it one
of the worst performers in Asia and setting it on course for a
worst yearly performance ever.
The deepest global financial crisis in 80 years, slowing
growth and heavy foreign fund outflows amid unprecedented
volatility have battered shares this year.
Foreign funds have been net sellers of more than $13.3
billion of Indian stocks in 2008, after having invested a
record $17.4 billion last year when the BSE index rose 47.15
percent.
The market will take time to recover and the next two to
three years would be difficult to predict, Hemendra Kothari,
founder and chairman of DSP Merrill Lynch told Reuters.
[ID:nBOM421920]
"The major variable for markets is the earnings season,"
said Amitabh Chakraborty, president for equities at Religare
Securities. "While most of the poor numbers is already priced
in, investors fear there could be some bad surprises in store."
Shares in financials such as ICICI Bank (ICBK.BO) rose 6.4
percent to 444.50 rupees and State Bank of India (SBI.BO) added
2.2 percent to 1,271.70 rupees on market talk of a reduction in
interest rates, traders said.
"It's inevitable, its just a matter of time," Kohli said,
referring to the prospects for rate cut in the near future.
Energy group Reliance Industries (RELI.BO), the top listed
firm, rose 2.9 percent to 1,247.30 rupees, after its unit
Reliance Petroleum (RPET.BO) started processing crude at its
580,000 barrels per day refinery last week.
Reliance Petroleum ended 4.4 percent higher at 88.40
rupees, extending Friday's gain of 6.3 percent.
In the broader market, 1,293 gainers were ahead of 1,104
losers on moderate volume of 274.9 million shares.
The broader 50-share NSE index rose 2.3 percent to
2,922.20.
STOCKS TO WATCH
* Bharat Forge Ltd (BFRG.BO) rose 2.3 percent to 80.60
rupees after the auto components maker said its board had
approved issue of non-convertible debentures for 2.5 billion
rupees to Life Insurance Corp on private placement.
* Core Projects & Technologies Ltd (CORE.BO) rose as much
5.4 percent to 47.05 rupees after the firm said it bought a
unit of U.S.-based education company, The Princeton Review
(REVU.O), for $20 million.
* Private carriers such as Jet Airways (JET.BO), Kingfisher
Airlines (KING.BO) and Spicejet (SPJT.BO) were up 2.9 to 7.2
percent after a fall in jet fuel prices in India.
MAIN TOP THREE BY VOLUME
* Satyam Computer on 30.7 million shares
* Unitech (UNTE.BO) on 27.3 million shares
* Suzlon Energy (SUZL.BO) 16.8 million shares
FACTORS TO WATCH
* Indian rupee trims losses on stock gains, weak dlr
[INR/]
* Indian bond yields in narrow band, supplies eyed
[IN/]
* FOREX-Dollar falls broadly, sterling sinks
[FRX/]
* Oil rises above $40 on Israel-Hamas violence
[O/R]
* GLOBAL MARKETS- Oil, gold surge as violence in Gaza flares
[MKTS/GLOB]
* U.S. stock index futures point to gains; focus on oil [.N]
* For closing rates of Indian ADRs
INADR
(Additional reporting by Narayanan Somasundaram; Editing by
Ranjit Gangadharan)
