Bangalore: Markets ended Wednesday 0.9% lower on lacklustre volumes, led by losses in the country’s top-listed real estate firm DLF Ltd and tracking weaker global markets as fears over Europe’s widening debt crisis weighed on sentiments.
Concerns about rising interest rates and inflation continued to lurk a day ahead of the expiry of the monthly derivatives contracts, dealers said.
“This market is down because of lack of buying interest, and because of corrective downside due to derivatives expiry,” said Deven Choksey, managing director and CEO of brokerage KR Choksey Shares in Mumbai.
Monsoon rain outlook and crude price movements will be key triggers for the market that he expects will move in a 300-point range in the near term.
The 30-share BSE index closed down 0.9% or about 165 points at 17,847.24 points, with 25 of its components in the red.
The benchmark has lost 6.7% this month as foreign funds pulled out $1.7 billion pressured by a sharper-than-expected 50 basis point rate hike by India’s central bank early in May.
The country’s central bank has been one of the most aggressive central banks in tightening policy to tame stubbornly high inflation, raising rates nine times since March 2010.
“There are inflationary pressures hovering over the market. The outlook for the market is not positive,” said K. K. Mital, head of portfolio management services at Globe Capital in New Delhi.
“The way the market is going down, the way the foreign inflows are not coming in -- (this) does not give comfort to the investors.”
DLF, which is sensitive to interest rates, missed analysts’ estimates with a 19% fall in quarterly profit, and warned the central bank’s actions to tighten liquidity will likely temper sector growth in the current fiscal year.
“DLF’s numbers were not good. Concerns are building up about the company’s cash flows,” Mital said. “The high interest rates environment will keep the real estate stocks under pressure.”
Its shares fell 5% to a two-year low of Rs 208.10 earlier in the session and ended 4.1% lower at Rs 210.05.
The 50-share NSE Index ended down 0.85% at 5,348.95 points. In the broader market, 905 losers led 503 gainers on a relatively lower volume of about 488 million shares on the NSE.
Infosys was amongst the major losers, shedding almost 2% to end at 2,788.65 rupees, after India’s No. 2 software services exporter said late on Tuesday it had received a subpoena from a U.S. district court related to short-term business visas for its staff.
Larger rival Tata Consultancy Services shed 1.85%, while Wipro ended nearly 1% lower.
Top engineering and construction firm Larsen & Toubro , which had gained almost 9% since posting estimate-beating quarterly profit last week, saw some selling pressure on Wednesday. The shares shed 2.3% to close at Rs 1,604.50.
Tata Steel ended down 0.9% at 561.20 rupees ahead of its quarterly results. The world’s No. 7 steel maker is expected to report profit fell by a third, hurt by tepid demand in Europe and rising raw material prices.
Coal India , the world’s largest coal miner, ended 1.8% up at Rs 377.35, also ahead of its quarterly results.
It is expected to post strong revenue and profit for the quarter later in the day, helped by a price hike for some customers in late February.
Reliance Industries Ltd , which has the highest weight on the index, extended its losing run to close 1.1% lower at 906 rupees. The stock last week fell to its lowest level in more than six weeks, mainly on concerns over decline in gas output from its blocks off India’s east coast.
Elsewhere, by 1058 GMT, the MSCI world equity index was down 0.16%, while the Thomson Reuters global stock index shed 0.2%.
Indian Hotels Co rose as much as 3.8% early in the session after it reported on Tuesday a 57% rise in quarterly net profit. The shares ended at Rs 78.40, down 0.8%.
Tyre maker JK Tyre and Industries ended 3.1% higher at Rs 91.25 after a top official said it was looking to acquire a rubber plantation to offset rising input costs.
Suzlon Energy added 2.1% to close at Rs 50.20 after the company said on Wednesday it signed a contract with African Clean Energy Developments for supplying up to 200 wind turbines.