Mumbai: Indian shares fell as much as 1.4% on Monday, as fraud charges against Goldman Sachs and fears of another increase in interest rates weighed on investor sentiment.
Reliance Industries, which has heaviest weightage in the benchmark index, led the losses, falling as much as 1.7% to Rs1,065.30 amid fading risk appetite among institutional investors. Financials such as State Bank of India and ICICI Bank dropped, mirroring their peers elsewhere in Asia on charges against Goldman though most Asian banks were not as active as their US peers in the subprime mortgage market.
“All the markets globally are reacting to the charges against Goldman,” said Neeraj Dewan, director of Quantum Securities in New Delhi. “It’s more of a sentimental issue, which will have an impact on the market in the short term.”
Goldman was charged on Friday with fraud by the US Securities and Exchange Commission over its marketing of a subprime mortgage product.
By 10:45am, the main 30-share BSE index was down 1.2% at 17,376.95, after falling early to its lowest level in nearly a month. All but one of its components were in the red. The broader 50-share NSE index was down 1.4% at 5,191.40.
The benchmark is down 0.5% so far this year, after surging 81% in 2009.
Top lender State Bank of India fell 0.8% to Rs2,029.90 and No. 2 ICICI Bank dropped 0.7% to Rs915, with expectations for a rate increase when the central bank announces policy on Tuesday also keeping investors wary.
A Reuters survey last week showed most economists expected the Reserve Bank of India to increase its key short-term borrowing and lending rates by at least 25 basis points.
Shares in Tata Consultancy Services rose nearly 1% to Rs822.90, the only counter to trade positive in the benchmark index, on hopes the top software services exporter’s quarterly net profit will beat street estimates.
Tata Consultancy is expected to report a 38% rise in the January-March net profit after market hours.
In the broader market, losers were ahead of gainers in a ratio of nearly 3:1 on volume of 84 million shares.