Mumbai: Indian shares dropped 0.4% in choppy trading on Thursday as worries about slowing economic growth and sluggish consumer spending weighed on firms such as cigarette-to-hotels group ITC Ltd and engineering conglomerate Larsen and Toubro Ltd.
Lenders, however, climbed on hopes government moves to shore up the capital of state-run banks would help ease concerns about their outlook.
Export-driven software services bellwether Infosys Ltd added another 0.65%, a day after it had jumped 7% following a less-than-expected cut in full-year sales forecast and strong quarterly earnings.
Bigger rival Tata Consultancy Services Ltd closed up 1.3%, while the third largest software firm Wipro Ltd dropped 0.3%.
The main 30-share BSE index closed down 0.44%, or 74.47 points, at 16,883.92, after initially rising 0.7% and then falling as much as 0.6%.
Traders said there was resistance after the index had climbed to its highest close in more than three weeks in the previous session.
Shares of State Bank of India (SBI), the country’s top lender, climbed 0.8% on plans by the government to pump in cash to shore up the capital of the state-run bank.
The government will inject Rs 4,500 crore to Rs 8,000 crore into the bank by March 2012, D.K. Mittal, secretary of financial services, said.
Rivals ICICI Bank Ltd rose 2.3% and HDFC Bank Ltd gained 0.75%.
K.K. Mital, head of portfolio management at Globe Capital Market Ltd, said bank stocks had slumped too much and were again looking attractive for investment.
The banking index ended up 1.04%, trimming the fall in the year to date to 17.95%, compared with a 17.6% drop in the main index.
Investor confidence about the outlook for companies were dented by comments of the central bank governor, traders said.
Speaking after the central bank board meeting in Jaipur, D. Subbarao reiterated the Reserve Bank of India’s (RBI) stance of trying to contain inflation even at the cost of some short-term economic growth.
“We are aware that some central banks in Asia and some outside Asia have reversed (tight policy). Those circumstances are quite different from ours,” he said.
Jindal Steel and Power Ltd fell 3.4%, while miner Coal India Ltd and aluminium maker Hindalco Industries Ltd fell 1.75% and 2.8%, respectively.
Reliance Industries Ltd closed down 0.3%, ahead of its quarterly earnings on Saturday.
The 50-share National Stock Exchange (NSE) index lost 0.4% to 5,077.85 points.
In the broader market, there were 729 losers against 686 gainers on moderate volume of 622.1 million shares.
Development Credit Bank rose 6.9% after its September quarter net profit more than doubled.
Rice makers Kohinoor Foods Ltd and LT Foods Ltd rose 6.8% and 1.6%, respectively, on hopes local prices could climb on the back of floods in Thailand and reports of world’s second-largest exporter Vietnam’s potential default on deliveries.