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Midsession: Reliance leads Sensex down 2%

Midsession: Reliance leads Sensex down 2%
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First Published: Mon, Jun 15 2009. 01 56 PM IST
Updated: Mon, Jun 15 2009. 01 56 PM IST
Mumbai: Indian shares fell 2% on Monday afternoon led by Reliance Industries after a court ruling on gas supply was not in the energy firm’s favour.
At 1:34pm, the 30-share BSE index was down 1.86% at 14,953.84 points after falling as low as 14,930.70.
Reliance Industries, which has the highest index weightage, slid 6.9% to Rs2,194. An Indian court directed India’s Reliance Industries to supply gas to a former group firm at about half the government-approved price.
Markets fell 0.7% earlier as renewed jitters about the world economy dented sentiment across Asia and sparked profit-taking on a near 90% rally since early March.
But there were bouts of buying from some long-term investors as they took advantage of the drop to enter the market, traders said.
Energy giant Reliance Industries, which had more than doubled in value over the past three months, and diversified engineering and construction conglomerate Larsen & Toubro that has near tripled over the period, led the losses.
Non-ferrous metals producer Sterlite Industries was also among the major losers as copper prices slid.
Still, gains in leading lenders such as State Bank of India and ICICI Bank limited the losses.
By 11:27am, the 30-share BSE index was down 0.7% at 15,126.91 points, with 14 stocks declining. It fell as much as 1.3% earlier and briefly turned positive. The 50-share NSE index was down 0.4% at 4,567.
The benchmark index had raced up 89% from a 2009 low in early March, largely driven by foreign funds who ploughed more than $7.5 billion into the market since mid-March.
Rising optimism about the global economy and hopes for pro-market reforms such as a relaxation of foreign investment rules in the pension and insurance sectors, privatisations and higher infrastructure spending after the ruling coalition was re-elected last month have also underpinned the market.
The main index is up about 58% this year, after plunging by more than half in 2008 when foreign investors withdrew $13 billion.
However, there are concerns the run-up is overdone, with valuations not in line with fundamentals.
“Definitely the market looks stretched. Today no one wants to buy aggressively as there are genuine concerns that there will be more of a correction,” Arun Kejriwal, a strategist at research firm KRIS, said.
Traders said investors will remain cautious ahead of the annual budget in early July, when the coalition government is expected to announce plans to pursue investor-friendly reforms to boost growth.
Reliance Industries, which has the most weight in the main index, shed 4.2% to Rs2,257, while Larsen & Toubro dropped 1% to Rs1,567. Sterlite fell 4.5% to Rs686.15.
State Bank of India, the country’s top lender, rose 1.5% to Rs1,660.90, while ICICI Bank gained 0.6 percent to Rs745.05.
In the broader section, losers led gainers 2 to 1 on relatively low volume of 171 million shares.
Asian shares were lower on Monday, pulling back from eight-month highs hit earlier this month, as investors fretted over whether the global economy had improved enough to justify a further rally.
Japan’s Nikkei was down 0.9%, while MSCI’s measure of other Asian markets fell 1.8%.
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First Published: Mon, Jun 15 2009. 01 56 PM IST
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