Bangalore: Shares fell 1.1% on Monday, tracking weak Asian markets as anti-government protests in Egypt led to flight from risky assets, with soaring domestic inflation and rate rise fears also weighing.
The 30-share benchmark BSE index is set to post its worst monthly fall in more than two years.
Tata Consultancy Services and Infosys Technologies, the top two software exporters, led the losses and fell 3.3% and 1.9%, respectively, on growing uncertainty about the outsourcing business momentum. The chief executives of Tata Consultancy and Infosys told Reuters on Friday at Davos that Europe’s debt crisis and rising inflation at home could slow the growth that they have enjoyed in recent years.
Top car maker Maruti Suzuki dropped over 5% to a new 12-month low after its December-quarter net profit slipped 18% and its finance chief said cost pressures and competition would keep margins under pressure.
By 12:11pm, the benchmark index was trading down more than 1% at 18,204.12 points, with 23 of its components falling. The Nifty or NSE-50 index was down 0.9% at 5,462.50 points.
At its intra-day low of 18,038.48 points, the index has shed more than 12% this month and is on track to record its worst monthly decline since October 2008.
“The Egypt situation is not having a very big impact directly on our markets, but it is creating ripples in the international markets, which is affecting us,” said Ambareesh Baliga, vice president at Karvy stock Broking.
More than 100 people have been killed during six days of protests in Egypt aimed at toppling President Hosni Mubarak.
A wider conflagration in the region could threaten the flow of oil at a time when policymakers in emerging markets are already bedeviled by high food and fuel prices and some developed economies are gaining momentum.
Investors’ sentiment has also been dented by soaring inflation and rate rises that are starting to hit corporate margins and leading to more foreign fund managers slashing holdings.
“We could see some small bounce back here and there but the general direction is downward as we expect more foreign investor money to flow out as other markets perform better,” Baliga said, adding the market could correct 4-5% more from the current level.
So far this month, foreign funds have pulled out over $1.06 billion from Indian equities, in contrast with a record $29.3 billion they pumped in last year.
The fund outflows pulled the Indian rupee to two-month lows on Monday.
Telecoms stocks such as Bharti Airtel dropped 3.6% to Rs 315.50, while Idea Cellular lost 1.1% to Rs 69.40 as the government plans to ask telecom firms pay a market-linked price for second-generation mobile spectrum beyond 6.2 mega hertz.
The actual price the firms will have to pay is yet to be finalised.
Mortgage lender Housing Development Finance Corp was down over 4% at Rs 620.65 and No. 2 lender ICICI Bank was trading 0.8% lower at Rs 1,009 on fears rising interest rates will hit demand for loans.
Oil and Natural Gas Corp bucked the general trend and rallied over 7% to Rs 1,216.80 after its quarterly net profit more than doubled, boosted by rising crude prices and one-time gains.
In the broader market, losers were more than double the number of gainers on a volume of 160 million shares.
Siemens rose nearly 17% to Rs 851 after the company’s parent Siemens AG said it was making an open offer to buy upto 19.82% stake in the Indian arm at Rs 930 per share.
Dr Reddy’s Laboratories Ltd rose as much as 3.7% after India’s No. 2 drugmaker said a US district court cleared the sale of its generic version of Sanofi-Aventis’ allergy medicine Allegra D24.