Mumbai: Indian shares slipped 0.2% on Wednesday, led by financials as investors braced for an interest rate increase next week when the central bank reviews policy.
Lower Asian peers also contributed to the subdued trend, but traders said the confidence of foreign investors in India’s domestic-demand driven economy was a source of strength for the market.
At 10:29am, the 30-share BSE index was down 0.21% at 20,178.99 points, with 21 of its components declining.
The benchmark is up 15.5% so far in 2010, boosted by foreign fund inflows of a record $24.6 billion.
“With the kind of steep rise we have seen, consolidation is expected, said Sandeep Singal, co-head of institutional equities Emkay Global Financial Services. “All eyes are now set on the Fed meet,” he said referring to the U.S. Federal Reserve meeting next week.
Tech Mahindra dropped as much as 2.7% to Rs764.10 after the outsourcer said late on Tuesday second-quarter profit fell more than 10% as it booked a charge related to its shareholding in Mahindra Satyam.
Bank of America-Merrill Lynch said the stock was too pricey and it was maintaining its underperform rating.
Top power producer NTPC shed 0.8% after reporting nearly flat September quarter net profit.
The Reserve Bank of India warned on Tuesday that surging food prices were structural and would put upward pressure on inflation and interest rates. Traders expect the central bank to raise interest rates by at least 25 basis points on 2 November.
Leading lender State Bank of India was down 0.3%, while rivals ICICI Bank and HDFC Bank shed 1.2% and 0.2% respectively.
Energy giant Reliance Industries was up 0.9%, as it continued to catch up with the broad rally after being a laggard. The stock is up only 1.6% year-to-date.
In the broader market, gainers led losers in a ratio of 1.2:1 on volume of 141 million shares.
The 50-share NSE index was down 0.4% at 6,058.30.
Elsewhere, the MSCI’s measure of Asian markets other than Japan was down 1.5%, while Japan’s Nikkei fell 0.2%.
Developer Prestige Estates Projects debuted at Rs190, a premium of 3.8% to its issue price of 183, and extended gains to Rs198.70.
HCL Infosystems was down 2.2% at Rs116, as the personal computers and laptop maker said its July-September net profit declined 19.5%.
Mangalore Refinery & Petrochemicals rose 3% to Rs85 after its quarterly profit rose 57%.
Outsourcer Mahindra Satyam was down 0.3% at Rs80.60, after UBS said on Tuesday it had initiated coverage of the company with a “sell” rating as it expected client and employee attrition would continue hurting the company this fiscal year.
Raymond rose 2% to Rs446, after the textiles firm said on Tuesday its September-quarter net profit rose more than five times from a year ago.