New Delhi: Indian shares extended losses to more than 2% on Thursday afternoon but quickly trimmed the fall, after an 18% rally over the previous eight sessions.
At 12:56 pm, the 30-share BSE index .BSESN was down 1.7% at 11,095.39 points, after falling as much as 2.05%.
Profit-taking pushed Sensex 0.9% lower. Energy giant Reliance Industries was targeted by profit takers, while blue-chip software firm Infosys Technologies extended its fall from the previous session after it gave a weak outlook.
By 12:06pm, the 30-share BSE index was down 0.9% at 11,182.88 points, with 20 stocks declining. The benchmark had risen as much as 0.7% earlier and the 50-share NSE Nifty was down 0.6% at 3,463.50 points.
The benchmark had recovered more than 40% of its value from a 2009 low in early March through Wednesday as once risk wary foreign funds resumed pouring money into the market.
“The point is that we had gone crazy. The market rebounded yesterday even though Infosys painted a bleak picture. That was unnatural,” Arun Kejriwal, an analyst at research firm KRIS, said.
“The rally was purely based on sentiment, and had nothing to do with fundamentals,” he said. Annual inflation rate was at 0.18% for the week ended 4 April, while analysts had expected it to have turned negative for the first time.
A lack of clarity about the outcome of month-long general elections that began on Thursday, amid signs the two main national parties may struggle to form a stable coalition, is weighing on investors, traders said.
Top-listed firm Reliance Industries , which has the most weight in the main index, fell 2.7% to Rs1,776.70, after racing up more than 20% over the past eight sessions.
No. 2 software services exporter Infosys dropped 2.5% to Rs1,336.25, a day after it forecast its first decline in annual revenue as global demand for outsourcing slowed in a harsh economic climate.
No. 1 telecoms firm Bharti Airtel was up 1.5% at Rs695, while consumer goods maker Hindustan Unilever gained 1.6% to Rs239.45.
In the broader market, advancers led losers 1,219 to 1,131 on moderate volume of 339.2 million shares.
Asian shares trimmed gains after data showed China’s economy grew 6.1% in the first quarter from a year earlier, its slowest ever quarterly growth.