Mumbai: Markets shed 1.11% on Monday, after eking out 0.4% gains last week, tracking weak global peers on lingering worries over the euro zone’s sovereign debt crisis, with Friday’s local rate hike weighing on rate-sensitive sectors.
There was selling pressure in the latter half of the local trade as European stocks were down 1.6% after the EU finance ministers failed to come up with a constructive solution to the debt crisis at weekend meetings.
The main 30-share BSE index ended down 188.48 points at 16,745.35, with 21 of its components closing in the red. Indian shares had logged their third straight weekly gain last week, snapping a five-week-long losing streak .
“The sensex came under selling pressure in the noon as it went down by upto 200 points as Europe opened weak and the US futures showed weak trade,” said D.D. Sharma, vice president at Anand Rathi Securities.
The fall was exacerbated by fears that more domestic interest rate tightening by the central bank would impact profitability and growth of rate-sensitive sectors like banking and real estate.
Banking sectoral index closed 1.17% down, while real estate sectoral index ended 0.62% lower.
The Reserve Bank of India (RBI) raised key lending rate for the 12th time in 18 months last Friday and reiterated its vow to fight near double-digit inflation even as growth slows in Asia’s third-largest economy.
Top private sector bank ICICI Bank fell 2.4%, while top lender State Bank of India shed 1.5%. The country’s top real estate firm DLF Ltd fell 2.08%.
Non-ferrous metals producer Sterlite Industries (India) Ltd , a unit of London-listed Vedanta Resources , was the top loser among the 30-share benchmark index, shedding 3.5%.
Copper maker Hindustan Copper also closed 2.22 lower, as copper prices on London Metal Exchange (LME) slid to their lowest this year as investors focused on a possible slowdown in the global economy with major developed nations mired in sovereign debt issues.
ABB Ltd fell 1.7% to close at Rs 818.95, after the Indian unit of Swiss engineering group ABB’s managing director said that its margins were coming under pressure as customers held back spending.
“There is no domestic event that the market is looking forward to. It’s completely dancing to the tunes of the negative global cues,” said Gajendra Nagpal, chief executive at Unicon Financial Intermediaries.
MSCI’s index of Asia-Pacific shares outside of Japan fell 2.7%, edging back towards its July 2010 low hit last Monday.
Market players continued to cut risk and move into gold and US Treasuries, even as speculation grew that the Federal Reserve would announce further policy easing moves to stimulate the faltering US economy at a meet this week.
The two-day meet that ends on Wednesday is eyed for direction, traders said.
The 50-share NSE index closed down 1.03% at 5,031.95 points. In the broader market, there were 1.23 losers for every gaining stock with 503.5 million shares changing hands.
Debt-laden telecom infrastructure company GTL Ltd ended 8% higher as it has received lenders’ approval for a Corporate Debt Restructuring (CDR) proposal.
Mercator Lines Ltd , India’s second-largest private shipping firm, ended up 4.4% after a top official told Reuters it plans to list its coal division overseas.
Automaker Tata Motors closed down 0.09% after its unit Luxury car maker Jaguar Land Rover said it will invest 355 million pounds ($561 million)on a new engine plant in central England.
GVK Power & Infrastructure ended down 0.88%, after rising as much as 7.4% in early trade, after it agreed to pay $1.26 billion for some assets of Australia’s Hancock Group.