Mumbai: Indian shares fell on Thursday, led by ICICI Bank Ltd which was hit by profit-taking after beating earnings forecasts, while the expiry of January derivatives kept trading volatile towards the end of the session.
The BSE index, Sensex, added 2.4% in January to post its third-straight monthly gain and its longest winning streak since gaining for four consecutive months from June to September in 2010.
The gains were sparked by strong continued foreign net inflows, which reached Rs.20,810 crore ($3.90 billion) as of 30 January.
Analysts attribute January’s gains to the government’s efforts at additional fiscal reforms, but shares have fallen 1.04% since the central bank disappointed on Tuesday with a cautious stance on interest rates despite cutting them for the first time in nine months.
The outlook for stocks largely depends upon how the government handles its current account deficit and how the budget pans out.
“Next month will be critical from the Indian budget point of view, so that will occupy most of the mind space of traders and investors,” said Jagannadham Thunuguntla, head of research, SMC Investments and Advisors Ltd.
“RBI (Reserve Bank of India) will watch the budget data carefully and the impact it will have on inflation and rupee movement and take further decisions depending on that.”
The benchmark BSE index, Sensex, fell 0.55%, or 110.02 points, to end at 19,894.98, a shade below the psychologically important 20,000 mark. The broader NSE index, the Nifty, fell 0.35%, or 21 points, to end at 6,034.75 on the last day of derivatives expiry.
January derivatives expired on Thursday. The last day of these contracts can typically lead to volatility in cash markets, especially towards the end of the session.
Dealers are now watching for earnings of companies like Bharti Airtel Ltd, Bharat Heavy Electricals Ltd and auto sales numbers for sectoral cues.
Bharti Airtel shares ended 1.52% lower ahead of December quarter earnings.
ICICI Bank shares ended 1.93% lower, after earlier hitting their highest since 16 November 2010, on profit-taking after India’s No. 2 lender beat forecasts with a
30.2% rise in net profit for the third quarter.
Its shares have risen 6.5% this month as of Wednesday’s close on hopes of rate cuts and better earnings. Colgate Palmolive (India) Ltd shares fell 2.43% after reporting lower-than-expected volume growth at 8%, the lowest in the past 15 quarters.
Among banks, the state-owned ones, which have cheaper valuations than private sector peers, rallied after reporting improved asset quality in the October-December quarter. Punjab National Bank rose 9.37%, its biggest gain since 18 May 2009, while Union Bank of India shares ended 5.81% higher.
Lupin Ltd shares ended 0.87% higher after the Mumbai-based drug maker’s net profit and margins beat expectations in the quarter ended in December.