Mumbai: Indian shares eased 0.1% on Thursday, taking a breather after a recent sharp rally that took them to a 33-month high, but the outlook remained positive on strong economic growth outlook and robust foreign fund inflows.
IT bellwether Infosys Technologies was among the major losers and was down 0.9% at 3,075 rupees, mirroring a fall in regional technology stocks on worries about demand for products like semiconductor and data storage. Sentiment on Indian technology stocks was also hit by data that showed private sector employment in the United States surprisingly shrank in September, triggering concerns about the health of the world’s largest economy.
Indian outsourcing firms such as Infosys and Tata Consultancy Services get more than half of their revenue from the United States. At 11:30am, the 30-share BSE index was down 0.13% at 20,517.21 points, with 16 of its components falling. The index had risen as much as 0.2% in early trade and then dropped as much as 0.3%.
The benchmark is up 17% in 2010, and is about 700 points from a record high of 21,206.77. On Monday, the index had hit 20,706.74, its highest since January 2008.
“All of us expect there should be some pause in the market so that new funds can come in,” said K.K. Mital, head of portfolio management services at Globe Capital.
“If the fund inflows continue to be strong I don’t think we will see a sharp downturn. The overall economic growth momentum continues to be good and we may see upward revision in corporate earnings estimates in next few weeks.”
The quarterly earnings parade will begin next week with Infosys, India’s second-largest software services exporter, reporting on 15 October.
Growth outlook in Asia’s third-largest economy remain strong, with the International Monetary Fund saying on Wednesday emerging economies were set to expand nearly three times faster than rich nations and raised India’s growth forecast.
The IMF said India’s GDP would expand by 9.7% in 2010, up from 9.4% it had projected in July.
Foreign funds have poured more than $20 billion into Indian shares so far in 2010. They have been net buyers in all sessions since the start of September, with the investments since then totalling $7.5 billion.
Shares in Tata Consultancy, the top software exporter, fell as much as 0.6% to Rs954.10 after Goldman Sachs said on Thursday it had downgraded the outsourcing firm to neutral from buy as the stock was expensive.
ACC, in which Swiss cement maker Holcim holds about 46%, was up 1.5% at Rs1,041.60 on hopes that India’s No. 2 cement producer would report strong shipments for September, dealers said.
In the broader market, 1,675 gainers led 1,007 losers, while 206 million shares changed hands on the BSE.
The broader 50-share NSE index was down 0.3% at 6,168.95.
Elsewhere, Asian stocks edged up to a two-year high on Thursday, supported by resource-related shares, but gains were capped and the US dollar held near a 15-year low against the yen before a US jobs report on Friday.
Spicejet was up 2.9% at Rs79.45 after Sun TV founder Kalanithi Maran and his unlisted aviation firm Kal Airways Private Ltd acquired 19.37 million shares, or 5.03% more in the firm.
Kalpataru Power rose 3.2% at Rs195.90 after the company said it would invest 900.45 million rupees in unit JMC Projects India towards preferential issue of 4.35 million shares at Rs207 each.