Mumbai: Indian shares shed 1.1% on Tuesday as investor euphoria waned over a $1 trillion package to salvage the euro zone debt crisis that had helped the market rally the most in nearly 10 months in the previous session.
World equities fell as worries remained on the ability of Greece and other debt-laden euro zone countries to bring down their budget deficits.
“Overall the scenario is far from good. There could actually be more trouble than what people expect,” said R.K. Gupta, managing director of Taurus Mutual Fund. “Yesterday’s rally in global stocks was just a knee-jerk reaction to the massive bailout package.”
The 30-share BSE index closed down 1.09%, or 189.02 points, at 17,141.53, with 28 components declining. The 50-share NSE index closed 1.1% lower at 5,136.15.
The benchmark had risen 3.35% on Monday. Foreign funds have pulled out $669 million in the first week of May due to jitters in the euro zone, reducing net inflows so far in 2010 to around $5.8 billion.
Energy major Reliance Industries, which has the highest weight on the Sensex, dropped 1.2% to Rs1,067.20, after a near 7% rally over two sessions following a court ruling in its favour in a high-profile gas dispute with Reliance Natural Resources
Telecoms companies fell as bids for one set of nationwide third-generation (3G) mobile spectrum licences in India reached $3 billion in an ongoing auction.
Bharti Airtel, the leading mobile operator, lost 3.1%, while rival Reliance Communications shed nearly 5%.
The stocks were also weighed down after the regulator recommended telecoms companies to pay a one-time fee for holding radio-spectrum beyond 6.2 mega hertz (MHz) based on 3G prices, a move that will hit established operators.
“High 3G bids are hurting. Also, the one-time spectrum fee recommendation is a negative,” said Harit Shah, a research analyst with Karvy Stock Broking. ”It is still only a recommendation. We will have to see if it turns into a law.”
Metals stocks fell after copper prices dropped in London on euro zone worries and the longer-term demand outlook in Europe and China. Sterlite Industries and Tata Steel shed 2.9% and 3.3% respectively. Aluminium maker Hindalco dropped 3.3%, even as its March quarter profit more than doubled and beat forecasts.
Software bellwether Infosys Technologies shed 0.5% while Tata Consultancy Services and Wipro dropped 1.9% and 0.7% respectively. All three companies get more than half their revenue from exports.
The sector index was down 0.9% after rising 2.7% on Monday. In the broader market, declining shares outnumbered advancing ones in a ratio of 1.6:1 on relatively lower volume of 338 million shares.