Sensex rises 144 points, but outlook uncertain

The Sensex climbed 0.8 per cent on Thursday and stretched gains into a third day, supported by firm world stocks and led by financial stocks.

But the turmoil across West Asia and North Africa, coupled with renewed concerns in the euro zone kept the outlook uncertain. Property developer Unitech posted its best single-day gain in nearly 16 months, rallying 9.6 per cent after JPMorgan upgraded the beaten down stock to “overweight” from “neutral” on Wednesday, citing cheap valuations, reasonable gearing, comfortable liquidity and high embedded land value.

The stock is still down nearly 39 per cent this year. Unitech was the most-traded on the National Stock Exchange (NSE). A total of around 92.2 million shares were traded on the BSE and NSE, about 2.5 times the 90-day daily average volume.

The 30-share BSE index gained 0.79 per cent, or 144.58 points, to 18,350.74 with 23 components advancing.

“Trade will be rangebound for some time. There is no clarity as to when will things stabilise overseas,” said Harendra Kumar, head of institutional equities at Elara Capital.

He said the tensions in West Asia and debt problems in the euro zone could affect fund inflows and high commodity prices could hurt earnings.

Instability in West Asia continued as western warplanes hit Libya for a fifth night, but have failed to stop Muammar Gaddafi's tanks shelling rebel-held towns or dislodge his armour from a strategic junction in the east.

Euro zone concerns were rekindled after Portuguese Prime Minister Jose Socrates resigned on Wednesday as parliament rejected his government's latest austerity measures. The benchmark index has gained 2.9 per cent over the past three sessions, but is down 10.5 per cent in 2011 following $1.8 billion pulled out by foreign funds. In the broader market, advance-decline ratio stood at 1.3:1 , while 316 million shares were dealt on BSE, better than the 30-day average volume of 276 million shares.

The 50-share Nifty closed 0.8 per cent higher at 5,522.40.

Technical indicators tend to support the idea of more weakness, Mizuho Securities Asia said in a note. The relative strength index was showing resistance around 60, suggesting the possibility of downtrend.

Financials advanced on optimism economic growth will not be hurt, and demand for loans will improve despite rising interest rates.

State Bank of India , ICICI Bank and HDFC Bank firmed between 0.2 per cent and 1.3 per cent. Tata Communications shed 2.6 per cent, a day after jumping 11.9 per cent after two brokerages upgraded the stock and raised their price targets on expectations that the sale of the company's surplus land could be expedited.

The company said on Thursday it had not received any communication from the government on its surplus land issue, after media reports said the company may sell the land for about Rs 143 billion.

Global stocks inched higher buoyed by confidence the world economic recovery remained on track.