Mumbai: Shares were trading lower in choppy trade on Friday, putting them on course for a monthly decline since May.
With expectations for an interest rate increase on Tuesday when the Reserve Bank of India (RBI) reviews policy, investors were mostly either unwinding long positions or staying off.
Most economists in a Reuters poll on Thursday expected the central bank to raise rates by at least 25 basis points to rein in stubbornly high inflation in the fast-growing economy. It would be the sixth increase since mid-March.
Top private-sector lender ICICI Bank, led the losses, slipping 0.9%. The bank is scheduled to release quarterly results on Friday and analysts expect a 12% rise in profit. At 10:27am, the 30-share BSE index was down 0.22% at 19,895.90 points, with 16 of its components declining. It is down 0.8% this month.
Weak Asian peers and the lack of positive surprises in quarterly earnings, though most companies had met high expectations, also encouraged investors to take profits after the market had leapt 11.7% in September in its best performance in 16 months.
The BSE index is up 14% in the year-to-date, thanks to record foreign fund investments of $24.7 billion.
“Inspite of more or less good results, the market could not move up this month. This shows the market had already factored in more than just good results,” said Ambareesh Baliga, vice-president of Karvy Stock Broking.
Besides the domestic rate rise expected next week, the market would also watch the US Federal Reserve’s two-day meeting that ends on Wednesday, and the Coal India listing on Thursday after the state miner raised $3.5 billion in the country’s largest IPO.
Bharat Heavy Electricals was up 1.6% as the top power and engineering equipment firm reported a forecast-beating 33% rise in quarter net profit.
Explorer Cairn India rose as much as 4.4% after its September quarter consolidated net profit jumped more than 3 times.
State Bank of India, the country’s largest lender, HDFC Bank and Housing Development Finance Corp were down between 0.1% and 0.8% in anticipation of more monetary tightening.
“Even after a 125 bps increase in the benchmark interest rates in 2010 and some moderation in inflation, real interest rates remain negative, even as growth remains robust leading to concerns that the RBI may continue to tighten aggressively,” BNP Paribas said in a note.
State-run explorer Oil & Natural Gas Corp shed 0.7% after it posted a 6% rise in quarterly profit on higher earnings from crude sales, but missed street estimates on higher subsidy payouts.
Hero Honda and Mahindra & Mahindra shed 2% and 1.3% ahead of their July-September earnings, while ITC edged 0.3% higher.
In the broader market, gainers led losers in a ratio of 1.3:1 on volume of 149 million shares.
The 50-share NSE index was down 0.2% at 5,977.15.
Elsewhere, the MSCI’s measure of Asian markets other than Japan was down 0.6%, while Japan’s Nikkei fell 1.6%.
Motherson Sumi Systems Ltd was up 3.6% at Rs193.55, as the auto parts maker said its July-September net rose more than five times.
Tata Global Beverages shed 2.7% to Rs125.35 after the top tea company’s September quarter consolidated net profit plunged more than 5 times.
Grasim Industries, part of the diversified Aditya Birla group with interests in textiles and cement, dropped 1.3% to Rs2,252.50 as quarterly net dived 58%.