Mumbai: Indian shares were choppy on Wednesday, as a slide on Wall Street overnight on concerns about the US financial sector kept investors wary across Asia.
Private-sector lender ICICI Bank fell 1.3% to Rs735 and engineering and construction firm Larsen & Toubro dropped 0.9% to Rs1,536.20, leading losers in the main index.
Energy giant Reliance Industries, which has the most weight in the main index, was down 0.9% at Rs1,963.85.
Top telecoms firm Bharti Airtel, which is in exclusive merger talks with South Africa’s MTN, eased 0.5% to Rs419.70.
“The market is trying to find its feet after the recent rally,” Sonam Udasi, vice president of research at BRICS Securities, said. “Definitely now there are signs of fatigue, but longer term, the prospects are still in place.”
No. 2 telecoms firm Reliance Communications gained 3.5% to Rs273.10, after it said on Tuesday it had repaid early more than $1 billion of loans, about one-fifth of its outstanding loans, and could repay more debt ahead of schedule.
The company’s telecoms tower unit has revived its initial public offer plan and is looking to raise up to Rs5,000 crore ($1 billion), the Business Standard reported.
By 11:20am, the 30-share BSE index was down 0.2% at 15,517.79 points, with 18 stocks declining, after rising as much as 0.3% earlier. The 50-share NSE index was down 0.1% at 4,620.55.
The benchmark has fallen 2.3% over the past two sessions, after rising for seven straight days for the first time in 4-months, as profit-taking emerged in equity markets worldwide after a recent rally.
Morgan Stanley said it had cut India’s economic growth forecast to 5.8% in 2009/10 from its earlier projection of 6.4%, in anticipation of a drop in agricultural output.
Analysts say a rush of liquidity pouring into emerging markets will support stocks in the near term as investors look to buy on dips even though worries about a weak monsoon, high valuations and looming inflation weigh.
“World over economists seem to be in a dilemma. On the one side, it looks like conditions are improving, but on the other hand there are those who say we are headed for much worse,” Udasi said.
Manufacturers from several countries including the United States produced some upbeat news on Tuesday, indicating that a recovery from the deepest global downturn since World War Two is slowly gaining traction.
Some fretted, though, that the recovery leans too heavily on expensive government efforts - from the popular US “cash for clunkers” auto sales incentives to a pre-election propping up of Germany’s labour markets.
And the reports were not enough to support global equities, which fell heavily on worries that investors have gotten ahead of themselves in pricing in a recovery.
In the broader market, losers led gainers 1,369 to 961 on relatively moderate volume of 158.3 million shares.
Most Asian markets were lower, with Japan’s Nikkei down 2.6%, while MSCI’s measure of other Asian markets fell 1.5%.
The S&P 500 fell 2.2% on Tuesday to 998.04 as scepticism that stocks can add to a nearly 50 percent rally over the last six months prevailed in the market.