Mumbai: Indian shares fell 1.2% on Friday, taking losses for the week to almost 3%, as investors cut exposure to financial issues that had run up sharply over the past month.
Outsourcer Infosys Technologies initially rose after it posted a 7.5% rise in quarterly profit and said full-year earnings would drop less than expected, but concerns about a stronger rupee and the weak sentiment pulled it down.
Traders said share valuations were stretched and there was little upside seen in the near term unless more quarterly results indicate a pick up in the coming months.
“The market is overheated at this point of time. What we saw today was pure profit sales, which are expected at levels like these,” said R.K. Gupta, managing director of Taurus Mutual Fund.
The 30-share BSE index closed down 1.2%, or 200.88 points, at 16,642.66 , after rising 0.7% in the morning. Twenty-six of its components lost ground. The 50-share NSE index closed 1.14% lower at 4,945.20.
The benchmark lost 2.9% on the week but is up over 72% so far this year, boosted largely foreign buying of $12.8 billion since the beginning of January.
Leading mobile operator Bharti Airtel pulled back 2.5% to Rs343.15 and rival Reliance Communications gained 1.2% to Rs249.35 after slumping more than 20% over the previous four sessions on profitability concerns.
Infosys ended down 1.5% at Rs2,178.35 after rising 3.7% early as the improved outlook failed to impress investors, suggesting the road to recovery for India’s showpiece software services companies will be long and bumpy.
Top lender State Bank of India and rival ICICI Bank dropped 2.3% each, to Rs2,066 and Rs901.35 respectively as investors took profits. The bank index, which had jumped 17% since the start of September, shed 1.6%.
“Investors are cautious as valuations seem stretched,” said Gajendra Nagpal, founder and CEO of Unicon Financial. “Sectoral rotation is taking place.”
Vehicle maker Tata Motors fell 6.7%, its biggest fall since 17 August, to Rs548.30 after the company raised $750 million by issuing global depositary receipts and convertible bonds to pay down some of its debt.
“The shares have been rising in anticipation of this deal and when the news came it fell,” said Jigar Shah, senior vice president at Kim Eng Securities.
“I would not read much more into it,” he said.
Tata Motors shares have risen about 250% so far this year, though they have fallen 5.5% this week. On Thursday the stock rose 5.4%. Its ADRs have risen 188% this year.
In the broader market, losers outpaced gainers in the ratio of 1.8:1, in a relatively moderate volume of 474 million shares.
The market will be shut for trade on Tuesday for local elections in the western state of Maharashtra, of which Mumbai is the capital.