Mumbai: Indian shares fell 0.7% on Tuesday, weighed down by disappointing factory output data and traders said all eyes were now on corporate earnings parade that starts this week.
Weak global markets and a large initial public offering that opens next week, which could suck cash away from the secondary market, also kept investors wary.
Energy conglomerate Reliance Industries dropped 1.4% and contributed the most to the losses in the main index. The stock has been a laggard this year in the absence of immediate triggers to boost earnings.
The 30-share BSE index ended down 0.67%, or 136.55 points, at 20,203.34 points, with 22 of its components closing in the red.
Data on Tuesday showed annual industrial output growth plummeted to single-digits for August, mainly on a contraction in capital goods and consumer non-durables, easing pressure on the central bank to raise rates again in November.
Factory output grew 5.6% in August from a year earlier, well below the median forecast in a Reuters poll of 9.65%.
But analysts cautioned that the wild swing in figures between July and August may hide the fact that growth was still steady.
“The growth was disappointing but it seems to be filling the gaps after the growth in the month before. I wouldn’t read much into it,” said Ambreesh Baliga, vice-president of Karvy Stock Broking.
He said the September quarter earnings, which will be kicked off on Friday by No. 2 outsourcer Infosys Technologies, would portray a better picture.
“My concern is we have discounted all positives, but have not made any provisions for negative surprises,” he said.
The benchmark BSE index is up 15.7% so far this year, with foreign funds pouring an unprecedented $21.4 billion into Indian equities since the start of January.
The inflow has picked up pace over the past six weeks on optimism about India’s economic growth, while the developed world struggles to head off a slowdown.
Traders said an IPO by state-owned Coal India Ltd, the world’s largest coal miner, which opens on Monday could also draw away investor funds.
The IPO is likely to fetch $3.5 billion, more than initially estimated, a Reuters poll of 11 fund managers showed.
Financials eased as investors booked profits. The banking sector index shed 0.4%, but is still up more than 41% in the year to date.
Leading lender State Bank of India shed 0.8% while rival HDFC Bank dropped 0.1%. Mortgage firm Housing Development Finance Corp fell 1.8%.
Vehicles maker Tata Motors raced 1.3% after the Economic Times reported it was planning to launch a new car aimed at taking on Alto manufactured by leading car maker Maruti Suzuki India. Maruti Suzuki shed 0.1%.
Engineering and construction firm Larsen & Toubro declined 1.9%. The stock has gained 19% so far in 2010.
Metal makers dropped as base metal prices fell in London. Non-ferrous metals producer Sterlite Industries and aluminium producer Hindalco closed 0.3% and 2.1% lower respectively. Tata Steel, the world’s seventh-largest steel producer, shed 1.1%.
In the broader market, declining shares outpaced advancing ones in a ratio of 1.5:1 in a relatively moderate volume of 443 million shares.
The 50-share NSE index declined 0.7% to 6,090.90 points.
Elsewhere, Europe’s FTEUROFIRST 300 was trading 0.8% lower by 3:49pm, while the MSCI’s measure of Asian markets other than Japan fell 1.5%.
Tecpro Systems, a material handling and engineering, procurement and construction firm, closed up 14.9% at Rs407.85 on its market debut.
Apparel maker Cantabil Retail India shed 22.4% on debut to Rs104.75 from its issue price of 135.