Mumbai: Markets posted their biggest monthly decline in six months and closed 0.1% lower on Friday as investors fretted over slowing domestic growth after a series of interest rate increases and the possibility of a US debt default.
The market is expected to be rangebound in August on views most known negatives were in the price even as investors stay wary of risky assets due to US and euro zone’s debt concerns.
State-run explorer Oil & Natural Gas Corp fell 2.9% after it reported quarterly profit that missed street estimates as higher subsidy payments offset gains from a rise in crude oil and gas prices.
ICICI Bank firmed 1.9% after the top private sector lender said it expects loan growth at 18% for the current fiscal year and net interest margin should be maintained at 2.6%.
The main 30-share BSE index closed 0.07%, or 12.32 points, lower at 18.197.20 points, with 18 components losing ground.
It lost 2.8% this week, its biggest weekly decline since the first week of May, and fell 3.4% in July - its biggest monthly fall since January.
“There is too much of pessimism on the Europe and US front, but most negatives are priced in as far our (Indian) market is concerned,’ said Om Ahuja, head of private wealth management at Emkay Global. “A steep downside looks unlikely right now.”
Foreign fund inflows into Indian shares have been fluctuating since last week, trimming their inflows since 23 June to around $2.8 billion.
Indian equities have been one of the worst performing ones among major markets in 2011, as hardening interest rates and a slowdown in growth engine hurt.
The central bank on Tuesday raised interest rates 50 basis points, showing unexpected resolve in fighting persistently high inflation despite slowing growth and uncertain global demand.
Ahuja, who manages around $410 million of stocks for his clients, said he is buying banks and infra stocks as valuations look attractive at this point in time, but is avoiding autos for now as loans get costlier.
“It is time to accumulate. August may be rangebound, but things should clear off later and I hope September is exciting for the market,” he said.
Top carmaker Maruti Suzuki advanced 1.8% after workers at its plant in the northern Indian state of Haryana ended a strike on Thursday.
Idea Cellular jumped as much as 5.9% to Rs 95.40, its highest level in over three years, after the fourth-biggest mobile carrier reported a lower-than-expected 12% fall in quarterly profit.
It later closed 4.8% higher at Rs 94.35. It was the most-traded stock on NSE with a volume of 42.4 million shares, nearly 9 times its 90-day daily average volume.
Late on Thursday, the stock markets regulator raised the ownership trigger for a mandatory takeover offer in a company to 25% from 15% now, a move that could draw more private equity and other investors into listed companies.
Analysts said investors could raise stakes above 15% in firms such as EIH Hotels , in which ITC and Reliance Industries each own 14.9%. EIH jumped 13.1%.
The 50-share NSE index slipped 0.1% to 5,482 points.
Market breadth was weak, as losers exceeded gainers in the ratio of nearly 2:1 on the NSE, while 678 shares were dealt, higher than the 90-day daily average volume of 584 million shares.
MSCI world equity index was down 0.5% at 1026 GMT, while emerging markets equities shed 0.9%.
GTL Infrastructure jumped 9.1% after a report said telecom tower firm Viom Networks has made a Rs 7500 crore offer to buy it out. GTL Infra later clarified there have not been any formal discussions with Viom Networks.
Jindal Steel & Power dropped 4.2% to Rs 587.85 after the company warned that fiscal year 2012 may not be a “very good year” as steel consumers, hurt by high interest rates and inflation, slow investments.
Auto parts maker Motherson Sumi Systems closed 4.1% lower at Rs 229.10 after it posted a lower-than-expected 10% rise in quarterly profit, hurt by higher costs.