Nifty gains after falling in 7 of 8 sessions

By Abhishek Vishnoi

MUMBAI (Reuters) - The Nifty rose on Wednesday after hitting a four-month low in the previous session as blue chips such as Tata Motors recovered on value-buying, although the outlook remains cautious given continued selling by foreign investors.

A slight recovery in the HSBC Services Purchasing Managers' index last month also helped improve sentiment, although the data out on Wednesday continued to show a contraction.

Still, the outlook remains cautious as Asian shares remain under pressure as part of an emerging market shakeout driven by the Federal Reserve's gradual scaledown of monetary stimulus and fears of a slowdown in China.

Foreign institutional investors sold shares worth $196.3 million on Tuesday, bringing their total over the previous eight sessions - or roughly since the start of the emerging market selloff - to $800 million.

"The outlook remains cautious as one cannot ignore that India is also an emerging market and we are not prone to what happens in other markets," said Kaushik Dani, a fund manager with Peerless Mutual Fund.

The Nifty rose 0.36 percent, or 21.50 points, to 6,022.40.

The index found support at its 200-day moving average for a second consecutive day after falling below that level at one point on Tuesday.

The benchmark Sensex rose 0.24 percent, or 49.10 points, to 20,261.03.

Among blue chips, Tata Motors Ltd gained 2.7 percent, adding to Tuesday's 2.8 percent rise after falling 12.9 percent in the eight sessions till Monday, while Tata Consultancy Services Ltd rose 2 percent.

HDFC Bank Ltd rose 1.1 percent, while Coal India ended 2.4 percent higher.

Ranbaxy Laboratories Ltd , India's biggest generic drugmaker by revenue, jumped 5.7 percent after it posted a narrower net loss in the latest quarter, helped by ramped-up sales of two acne drugs in the United States.

Tech Mahindra gained 3.9 percent after its December-quarter profit rose more than three-fold to beat analysts' estimates.

Power Finance Corporation Ltd surged 5.5 percent after its December-quarter earnings rose 37.3 percent to 15.34 billion rupees, beating some analysts' estimates.

However, among stocks that fell, Reliance Infrastructure Ltd ended lower 1.2 percent on caution ahead of its December-quarter earnings on Thursday.

The stock was also weighed after the Delhi government asked the region's power regulator to revoke the licences of two electricity distributors, run by the company, if they fail to supply power, drawing criticism from the companies.

(Editing by Subhranshu Sahu)