Bangalore: Weak global markets and investor profit booking, after the benchmark index surged 11.9% this month on robust foreign fund inflows, dragged Indian shares down 0.06% on Tuesday snapping a two-session rally.
Brisk profit sales were seen in metal counters, which had rallied the most in the previous session, dealers said.
The 30-share BSE index eased 12.5 points to close at 20,104.86, with half of its components closing in the red. It had risen as much as 0.2% to 20,157.51 points in early trade.
The benchmark index, which seesawed in early trade, took a definite turn southwards after European markets turned red on persistent worries over the banking sector in the peripheral euro zone countries.
The market was likely to remain volatile leading up to the expiry of derivatives on Thursday as investors adjust their positions, dealers said.
“This is just investors liquidating their positions ahead of the expiry,” said S.P. Tulsian, an independent investment consultant. “I expect the market to turn positive in a day or two.”
Betting on the strength of the Indian economy, which is expected to grow 8.5% this fiscal, overseas investors have pumped in $5.1 billion into Indian shares this month alone, taking net investment so far in 2010 to $18 billion and lifting the index about 15%.
The fund inflows top last year’s record $17.5 billion that helped push the benchmark index up 81%.
“Foreign investors who want to make money on their investments will have to come to India as the country will continue to show strong growth,” said D.D. Sharma, senior vice president of research at brokerage Anand Rathi.
But, the investment consultant Tulsian expects the benchmark index to correct by about 1,000 points in October, due to a lack of fresh positive triggers, and as he expects earnings for the September quarter to be muted.
Aluminium maker Hindalco Industries, which scaled a 32-month peak in the previous session, and non-ferrous metals producer Sterlite Industries, a unit of London-listed Vedanta Resources, both ended down 0.7%. However, Tata Steel, the world’s seventh-largest maker of the alloy, was up about 1%.
Index heavyweight Reliance Industries Ltd was down 1.1% as dealers did not see a positive trigger for the shares.
Profit booking was seen in select financials stocks, which have been riding on a robust loan demand outlook in the world’s second-fastest growing major economy.
Top private sector lender ICICI Bank and mortgage lender Housing Development Finance Corp shed 0.4% and 2% respectively.
But, top lender State Bank of India and No. 2 private sector lender HDFC Bank bucked the trend, gaining 0.3 and 0.5%, respectively.
Mahindra & Mahindra ended 2.5% higher at Rs711.80 after India’s top utility maker said it would raise prices of its vehicles by Rs3,000-8000 ($67-$178), effective October 1, due to higher input costs and new emission norms.
Reliance Communications, which rose nearly 3% intra-day ahead of the company’s shareholder meeting, eased to close 0.4% higher after its chairman Anil Ambani said India’s No. 2 mobile carrier was in talks with investors for a stake sale in its tower unit.
Export-dependant technology firms that reap most of their revenue from the United States were beaten down.
Sector leader Tata Consultancy Services and Infosys Technologies closed down 0.7% and 0.3% respectively, while Wipro lost 0.7%.
In the broader market, losers led gainers in the ratio of 1.2-to-1 on a volume of 571.5 million shares.
The 50-share NSE index was down 0.1% at 6,029.5 points.
Elsewhere, the FTSEurofirst 300 index of top European shares was down 0.1% by 1124 GMT while the MSCI’s measure of Asian markets other than Japan fell 0.4%.
Lanco Infratech rose as much as 2.2% after a senior official told the Reuters India Investment Summit the company would consider an initial public offering for its power business, which is expanding to meet rising demand in Asia’s third largest economy. The shares ended 1.5% higher at Rs69.45.
Shares in Mercator Lines closed 4.6% higher at Rs57.95 after the shipping firm said its board would meet on 30 September to consider fundraising via equity or would meet on Sept. 30 to consider fundraising via equity or warrants convertible into equity on preferential basis to founders or others.
Shares of GEI Industrial Systems which rose nearly 6% after the heat exchange equipment maker won contracts worth Rs135 crore gave up some gains to close 1.7% higher at Rs184.20.
Venus Remedies Ltd gained more than 6% after the drugmaker said it received Thai government’s licence for supply of anti-cancer drug Docetaxel. The contract is valid for one year and is expected to generate business of more than 100 million rupees for the company. The stock closed 4.2% up at Rs318.