Mumbai: Indian shares dropped 0.6% on Tuesday, falling for the fourth session in a row, as robust factory output data fuelled concerns the central bank may tight policy and sent banks lower.
Outsourcers bucked the trend and rallied after bellwether Infosys Technologies reported a smaller-than-expected drop in December quarter profit and raised its full-year forecast as big financial services clients boost orders.
Infosys rallied 4%, its biggest gain in two months, to Rs2,587.45, and propelled rivals Tata Consultancy and Wipro up 4.9% each.
“...we are surprised by the strength of the cyclical revenue turn and also see a number of productivity initiatives to offset our margin concerns stemming from the rupee, selling investments and wage pressure,” Bank of America-Merrill Lynch said in a report and upgraded Infosys to “Buy” from “Underperform”.
The 30-share BSE index fell 0.59%, or 104.20 points, to 17,42 2.51, its lowest close in 2010. Twenty-three of its components closed in the red. The 50-share NSE index was dropped 0.7% to 5,210.40.
“There are no big concerns in the market. It is just consolidating right now, after the rise we saw last year,” said Sandip Sabharwal, CEO of portfolio management services at Prabhudas Lilladher.
The benchmark had rallied 81% in 2009, posting its best yearly performance since 1991.
“The next key events to watch are RBI’s (Reserve Bank of India’s) policy and the (federal) budget,” Sabharwal said.
Industrial output in Asia’s third-largest economy grew at its fastest pace in two years in November, data showed and analysts said this would strengthen the case for the central bank to tighten stance to temper inflation expectations.
The wholesale price inflation due on Thursday is seen accelerating to 7.31% in December from a year earlier, according to a Reuters poll.
The central bank is set to review policy on 29 January.
Leading banks fell for the fourth day on market expectations the sector’s December quarter earnings could be muted due to sluggish loan growth, and weighed by worries the central bank may soon move to a hawkish monetary stance.
ICICI Bank contributed most to the losses and dropped 3.1% to Rs842.20, while top lender State Bank of India fell 2.8% to Rs2,203.25.
Goldman Sachs downgraded State Bank of India to “Neutral” from “Buy”, citing amongst other reasons relatively harsher headwinds from net interest margins, treasury and credit cost and provisioning pressures.
In the broader market, losers outpaced gainers in a ratio of 1.7:1 on volume of 679 million shares, higher than the daily average of 625 million shares last week.