Nifty edges higher for fourth straight session; blue chips gain

By Indulal PM

MUMBAI (Reuters) - The Nifty rose modestly on Monday to notch its fourth consecutive session of gains, led by blue chips that have under-performed recently such as Tata Motors and Oil and Natural Gas Corp, although the mood was broadly cautious.

Shares could be vulnerable ahead of the expiry of monthly derivatives contract on Thursday, while Asian shares skidded as investors awaited the preliminary reading of a private survey of manufacturing in China due on Tuesday

Investors are also expected to remain cautious ahead of the Reserve Bank of India's policy review on Sept. 30. Although the central bank is widely expected to keep interest rates unchanged, markets will focus on the tone of its statement.

"We are in a bull market and buyers are still emerging on every levels. However, you have to remain cautious about valuation and the risk as markets are near record highs," said Daljeet S Kohli, head of research at IndiaNivesh.

The benchmark BSE Sensex closed 0.43 percent higher at 27,206.74, after ending down 0.08 percent on Friday.

The broader Nifty ended 0.31 percent higher at 8,146.30.

Recent under-performers led the gains, with Tata Motors Ltd jumping as much as 4.1 percent to a record high of 542.50 rupees. Shares in the auto maker were down 1.2 percent so far this month as of Friday's close, compared with a 2.1 percent gain in the Nifty.

Oil and Natural Gas Corp added 3.74 percent after falling 11.24 percent in the last two weeks.

ITC Ltd closed 3.2 percent higher, gaining for the fifth straight session. Defensive shares such as the cigarette maker have outperformed recently.

Shares in Punjab National Bank ended 1.13 percent higher after its board approved a five-for-one stock split.

Yet among shares that declined, drug makers fell sharply on profit-taking. Cipla Ltd declined 2.4 percent. The stock is still up 18.9 percent so far this month.

Sun Pharmaceutical Industries ended down 1.1 percent. The stock is still up 8.1 percent in September.

Metal stocks also fell as investors fretted over China's slowing economic growth. Tata Steel closed down 1.98 percent while Hindalco Industries Ltd ended 1.3 percent lower.

($1 = 60.8200 rupees)

(Editing by Anand Basu)