Mumbai: Indian shares erased gains of as much 1.6% and ended 0.7% lower on Tuesday, their second straight fall, as a retreat by European peers hit investor confidence and sparked profit-taking on a recent rally.
“Most of the fundamental factors, like improved GDP, are already factored into the market,” T.S. Harihar, vice president at ICICI Securities, said.
“In the short term, at least till the next quarterly results that are a month and a half away, the market will continue to trend according to overseas markets.”
State-run hydropower generator NHPC Ltd rose 1.9% to Rs36.70 on its trading debut, trailing market expectations after the company’s $1.25 billion IPO was heavily oversubscribed.
The muted debut is the second in a row from a major Indian company and may dampen enthusiasm for future listings.
“The listing is fairly below market expectations which was around Rs40-42,” said Ambareesh Baliga, vice-president at Karvy Stock Broking.
Maruti Suzuki shot up 7.6% to Rs1,545.95, its highest close, after the leading car maker’s August sales raced 42% to 84,808 units from the same period last year.
Top mortgage lender Housing Development Finance Corp slid 2.5% to Rs2,412.95 and engineering and construction firm Larsen & Toubro eased 1.1% to Rs1,550.05 to lead losses in the main index.
Energy giant Reliance Industries, which has the most weight in the main index, fell 1.1% to Rs1,982, while state-run Oil and Natural Gas Corp slipped 2% to Rs1,161.75.
“India is looking to other markets for support. There are no real domestic triggers to move the market,” Arun Kejriwal, a strategist at research firm KRIS, said.
Non-ferrous metals producer Sterlite Industries fell 2.9% to Rs655.85 as copper prices slipped more than 3% on Tuesday.
A US federal judge recommended Mexican miner Grupo Mexico’s bid to take control of US copper miner Asarco LLC. Sterlite had made a bid for the miner as it emerges from bankruptcy.
Judge Richard Schmidt of the US Bankruptcy Court in Corpus Christi, Texas, said Grupo Mexico’s was the better of two plans, as it was more likely to pay Asarco’s creditors in full.
Analysts have said investors were not pricing in a possible acquisition of Asarco into Sterlite’s stock, and so the latest court recommendation was not expected to significantly impact the Indian firm’s shares.
“The recommendation of the US Bankruptcy Court, which in our view is not binding but is expected to provide guidance, would now move to US District Court Judge for final confirmation,” JPMorgan analyst Pinakin Parekh said.
“We are currently not building in Asarco into our financials,” said Parekh, who has an “overweight” rating on Sterlite’s stock.
The 30-share BSE index ended down 0.74%, or 115.45 points, at 15,551.19 points - its lowest close since 21 August - with 23 stocks declining. The 50-share NSE index fell 0.8% to 4,625.35.
On Monday, the benchmark had fallen for the first time in seven days as equity markets worldwide slid on profit-taking after a recent rally.
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.
India warned on Tuesday that wholesale price inflation could end the fiscal year above the central bank’s forecast of 5% as a poor monsoon drives up food costs, adding to a chorus of warnings on prices.
Drought has affected 278 districts, increasing its spread despite higher rainfall in the past two weeks and making the rising prices of sugar and lentils the big worry for the country, the government said on Monday.
Indian manufacturing activity expanded at its slowest pace in five months in August as companies struggled to raise selling prices despite higher costs, a survey showed on Tuesday.
The economy grew 6.1% in the June quarter from a year earlier, meeting forecasts as government stimulus helped spur demand, but the poor monsoon threatens to erode growth later in the year even as it drives prices higher.
In the broader market, losers led gainers 1,663 to 1,169 on relatively heavy volume of 759.4 million shares.
Other Asian shares were higher, with Japan’s Nikkei rising 0.4%, while MSCI’s measure of other Asian markets was up 0.9%.