Mumbai: Indian shares flip-flopped and edged 0.2% lower on Wednesday, on resistance after a steep rally so far this year, while lower Asian shares added to the weak sentiment.
Profit booking in select stocks, such as State Bank of India and ICICI Bank, also weighed on the market.
The benchmark 30-share Sensex has more doubled from its 2009 lows seen in March, and rallied more than 78% so far this year, as foreign funds infused nearly $14 billion in Indian equities.
By noon, the 30-share BSE Index was trading down 0.24% at 17,181.55, with 21 of its components declining. The 50-share NSE index was down 0.3% at 5,100.40.
“Resistance is coming in at these levels and people are booking profits in some stocks which have risen a lot,” said Rajen Shah, chief investment officer at Angel Broking.
“Investors are churning their portfolios. They are exiting the stocks which seem to have peaked and entering those which missed out on participating in the rally,” added Shah.
Reliance Industries, which has the highest weight on the Sensex, recouped some of Tuesday’s losses, and rose 0.7% lower to Rs2,199. The stock had declined 1.8% on Tuesday.
The country’s Supreme Court which began a hearing in the gas supply dispute between the energy and petrochemical major with Reliance Natural Resources on Tuesday, will continue to hear the case in the day.
Billionaire Mukesh Ambani-led Reliance Industries and Reliance Natural, controlled by younger brother Anil Ambani, are fighting over terms of a deal to sell natural gas to Reliance Natural at a rate below the price set by the government.
Top lender State Bank of India fell 1.6% to Rs2,426. The stock is up around 88% so far in 2009.
Private lender ICICI Bank also shed 1.7%. This stock has more than doubled since the start of this year.
Software services firms firmed on increased optimism over the growth outlook for the sector.
“With significant pent-up demand, we expect 2010 IT budgets to be strong,” Citigroup Global Markets analysts Surendra Goyal and Vishal Agarwal said in a note.
“We believe that consensus estimates will continue to inch up over the next 6-9 months and recommend investors to participate in the recovery through TCS/Wipro,” Citigroup Global Markets said.
Top software services firm Tata Consultancy Services rise 2.5%, while rivals Infosys Technologies and Wipro climbed 1.3% and 1.5% respectively.
In the broader market, 1,333 gainers led 1,1172 losers, with 186 million shares changing hands.