Mumbai: Indian shares were trading 0.4% lower on Thursday, as Asian equities traded weak after comments by the chairman of the Federal Reserve added to concerns about the US economy, causing investors to dump riskier assets ahead of European bank stress test results.
Ben Bernanke said on Wednesday that policymakers expected US growth to be sustained despite recent signs of softening. He described the outlook as “unusually uncertain” but gave no indication that specific actions to deal with it are imminent.
Investors were also cautious ahead of the conclusion of the European Union examination of banks’ financial strength due on Friday. Financials led the decline on expectations that the central bank may hike key rates on Tuesday.
A majority of economists expect the Reserve Bank of India to raise key interest rates by 25 basis points in its quarterly review on 27 July and tighten policy further in coming quarters, a new Reuters poll showed earlier this week.
Top lender State Bank of India was down 0.5% while leading private-sector lenders ICICI Bank and HDFC Bank shed 0.8% and 0.1% respectively.
By 11:03am, the 30-share BSE Index was trading down 0.35% at 17,913.97 points, with two-thirds of its components trading in the red.
Declining stocks almost matched gainers in the broader market, while 120 million shares changed hands on the BSE.
“All eyes are set on the (banks’) stress tests. That should give global markets some clarity,” said Ambareesh Baliga, vice-president of Karvy Stock Broking. “We will see stock-specific activities as and when earnings are announced.”
Dr. Reddy’s Labs, ACC, Bajaj Auto, ITC and Idea Cellular will report quarterly earnings during the day.
“However, even if the results are good, they will be not be enough to shield the market, as none of the companies announcing results today are market leaders,” said Baliga.
So far in 2010, foreign funds have invested a net of $8.8 billion in Indian shares, driving the benchmark 2.4% higher.
For the year to date, the benchmark has outperformed MSCI’s broader index for Asian markets ex-Japan which has shed more than 4%. The 50-share NSE index was down 0.3% at 5,383 points.
Angel Broking said if the key indices - Sensex and Nifty - trade convincingly above their respective 18,045 and 5,420 levels, then they are likely to test 18,167 and 5,450 levels or even extend the gains further to 18,220 and 5,470 levels.
On the downside, if they breach the lower band of the range, then the Sensex is likely to take support at 17,690 points and Nifty at 5,310 points, the brokerage said in its report on technicals.
State-run explorer Oil and Natural Gas Corp shed 0.7% as its head said the company was interested in buying BP’s stake in an offshore Vietnam gas field.
Energy giant Reliance Industries, which has the highest weight on the Sensex, was down 0.6% at Rs1,051.60.
Drugmaker Dr. Reddy’s was down 1.4% while cement maker ACC climbed 0.3%. Vehicle maker Bajaj Auto raced 1.6%.
Cigarette-to-hotel business ITC climbed 0.7% while mobile operator Idea Cellular was down 1.7%.
Software services firm Mastek tumbled 7.6% to Rs273 towards close of market hours on Wednesday after it posted a net loss of 13 million rupees in the June quarter, weighed down by forex losses and higher costs.
Everonn Education was up 2.1% at Rs552.70, after Edelweiss Capital said SKIL Infrastructure will make an open offer for 20% of shares. Edelweiss is the manager to the offer.
United Breweries jumped 8.2% to Rs2,555 after the top beer maker said late Wednesday its net profit soared to Rs761.30 million in June quarter, compared with Rs355 million a year ago.