Mumbai: Indian shares fell 0.45% on Thursday to their lowest close in two weeks as worries about the impact of a weak monsoon on the economy and jitters about the sustainability of a global recovery kept investors cautious.
The main index fell for the fourth straight session, its longest losing run since mid-July, led by energy giant Reliance Industries, top telecoms firm Bharti Airtel and engineering and construction firm Larsen & Toubro.
Reliance, which has the most weight in the main index, fell 2% to Rs1,932.10, and Larsen dropped 1.1% to Rs1,516. Bharti, which is in exclusive merger talks with South Africa’s MTN, eased 1.8% to Rs405.35.
“The market is consolidating, and there are signs of negativity. We are facing a big drought and no one know how much it is going to impact corporate results,” said Alex Mathew, head of research at Geojit BNP-Paribas Financial Services.
India’s weakest monsoon since the early 1970s pushed up food prices in India by an annual 14.5% in the week to 22 August, adding to worries that wholesale price inflation is poised to accelerate in coming months.
Reliance Communications bucked the trend and rose 5.3% to Rs290.70, its highest close in two months.
It had gained 4.6% on Wednesday after the No. 2 mobile operator said it had repaid early more than $1 billion of loans, about one-fifth of its outstanding loans, and could repay more debt ahead of schedule.
Non-ferrous metals producer Sterlite Industries gained 1.6% to Rs645.55 as copper prices climbed higher on Thursday.
The 30-share BSE index ended down 69.13 points at 15,398.33, its weakest close since 21August, with 21 stocks losing ground. Trading was choppy, with the index rising as much as 0.8% during the day. The 50-share NSE index fell 0.3% to 4,593.55, its weakest close since 21 August.
The benchmark has fallen 3.3% this week as profit-taking emerged in equity markets worldwide, after rising for the previous seven sessions.
“The market is just taking its time and digesting the recent rally,” said Hitesh Agrawal, head of research at Angel Broking.
Analysts say a rush of liquidity into emerging markets will support stocks in the near term as investors look to buy on dips despite worries about a weak monsoon, high valuations and looming inflation.
“We have seen buying at every dip. But now there is a lack of news flow, and there are no big triggers in the short term,” Agrawal said.
“We will track international markets for the short term, until probably the second-quarter results come out.”
Manufacturers from several countries including the United States have produced some upbeat news this week, indicating that a recovery from the deepest global downturn since World War II is slowly gaining traction.
Some analysts are worried the recovery leans too heavily on expensive government efforts, and that investors have gotten ahead of themselves in pricing in a recovery.
In the broader Indian market on Thursday, gainers led losers 1,409 to 1,363 on average volume of 401.5 million shares.
Asian shares were mixed, with Japan’s Nikkei falling 0.6% and MSCI’s measure of other Asian markets up 0.9%.