January 23, 2020 / 4:53 AM / 25 days ago

Indian shares rebound after sharp fall, banks gain

BENGALURU, Jan 23 (Reuters) - Indian shares rebounded on Thursday after a sharp pullback this week, driven by bargain-hunting and well-received earnings reports from Axis Bank and Larsen & Toubro (L&T).

The NSE Nifty 50 index, which has slid 2% this week amid concerns over economic growth and poor corporate earnings, was up 0.49% at 12,165.50 by 0429 GMT. The S&P BSE Sensex was higher by 0.56% at 41,345.25.

Meanwhile, other Asian markets wilted as investors fretted over the spread of a new flu-like virus in China just as millions prepared to travel for the Lunar New Year.

Banking shares led the rebound in Indian markets. The Nifty banking index, down 2.81% this week through Wednesday, was higher by 0.64%, while the Nifty PSU bank index that tracks state-run lenders rose 1.07%.

“There is value-buying at lower levels due to the recent correction,” said A.K. Prabhakar, head of research at IDBI Capital in Mumbai. “A few stocks have corrected more than the market, and they offer attractive entry points.”

Poorly received earnings from top Indian companies this week dented risk appetite, but investors took heart from Axis Bank’s better-than-expected net interest margins and construction firm L&T sticking to its revenue growth outlook despite macroeconmic challenges.

Axis Bank was up 2.9%, while L&T rose 2.6%. Both stocks were among the top gainers on the Nifty 50.

The government’s move last year to cut corporate taxes is also helping companies report healthier profits.

But some economists say those actions may not be enough to stimulate growth, particularly as inflation touched a 40-month high in November.

Analysts have said Indian markets will likely remain volatile until the government presents the federal budget on Feb. 1, when it may also unveil more measures to lift growth.

Meanwhile, shares in bankrupt Dewan Housing Finance Corp Ltd , once one of the country’s largest shadow banks, were down about 1% after the company reported a 67-billion rupee ($943 million) loss for the September quarter.

Zee Entertainment Enterprises Ltd was down 4.7% after a nearly 6% rise on Wednesday. ($1 = 71.0700 Indian rupees) (Reporting by Sachin Ravikumar; Editing by Anil D’Silva)

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