New Delhi: Markets dropped 0.6% in choppy trade on Wednesday as investors looked for more assurances on European policymakers’ ability to resolve the euro zone debt crisis that threatens the global financial system.
Lenders such as ICICI Bank and State Bank of India were among the big losers after they had rebounded sharply in the previous session, indicating investors were far from convinced about the outlook.
“The European problem is still not solved. The uncertainty is still there,” said Vikas Khemani, president at Edelweiss Capital.
Plans to increase the financial firepower of the euro zone’s €440 billion rescue fund face opposition in Germany, while a Financial Times report said that a split had opened up within the currency bloc over the terms of Greece’s next bailout.
At 11:36am, 30-share BSE index was down 0.59% at 16,431.36, with 23 components declining, after rising nearly 3% on Tuesday.
Khemani said Tuesday’s rebound after a four-day slide was triggered by optimism about the plan being putting together to contain the euro zone debt problem.
“Now, investors are watching if the plan can get through,” he said.
The benchmark index has lost about a fifth this year, making it one of the worst performing markets in the world. Foreign funds are net sellers of $209 million of shares so far in September.
Export-driven software services climbed as a weakened rupee is expected to boost realisations for the showcase $76-billion sector. The IT index was up about 2%.
Top software service exporter Tata Consultancy Services was up about 1.5%, while No. 2 Infosys gained 2.3% and smaller HCL Technologies firmed more than 4%.
The rupee has dropped about 10.5% from its peak in July this year.
Oil and gas explorer Cairn India rose more than 3%, a day after the board of Oil and Natural Gas Corp decided to issue a no-objection certificate for London-based miner Vedanta Resources’ deal to buy a majority stake in Cairn India.
No. 2 lender ICICI fell 1.9%, while bigger rival State bank of India shed about 1%. The bank index was down about 1.2%.
Utility vehicle maker Mahindra and Mahindra slipped nearly 2% and top car maker Maruti Suzuki was down 1.6%.
Shares in steelmaker JSW Steel fell as much as 4.9% after its vice chairman said on Tuesday a 10-million-tonne plant in southern India may have to shut completely if ore supplies did not improve.
HDFC Securities downgraded the steelmaker’s earnings by 15-22% for FY12-13 and lowered its price target to 566 rupees. The stock was trading down 4.25% at 584.45 rupees.
The 50-share NSE index was down 0.6% at 4943. There were two losers for every gainer in the broader section, with 185 million shares changing hands.
The MSCI’s broadest index of Asia Pacific shares outside Japan was down 0.1%.
Shree Renuka Sugars Ltd fell as much as 4.5% to Rs 55.05 after Morgan Stanley downgraded the stock to ‘equal weight´ from ‘overweight´ and cut target price to 57 rupees from Rs 105 on lower international sugar prices and uncertainty on the domestic sugar production.
Nitesh Estate rose as much as 5.6% after the company said it had launched a residential project that would yield a revenue of Rs 300 crore over 30 months.