Mumbai: Indian shares shed 0.3% on Monday and halted a six-session rally as investors took profits, taking cues from weaker Asian markets, but State Bank of India and Tata Steel rose on stronger growth hopes.
Traders said the market was consolidating and the undertone remained upbeat, with signs of manufacturing picking up despite a truant monsoon hurting farm output and pressuring food prices upwards.
“It’s just a pause after the run up we saw last week,” said Mehul Dedhia, assistant vice-president of sales at brokerage Sharekhan. “The advance tax data should be good and that should perk up the market in the near term.”
Companies are required to pay their advance taxes by Tuesday and expectations are the figure would be high, indicating a bullish outlook for corporate earnings.
The 30-share BSE index ended down 0.31%, or 50.11 points, at 16,214.19 after clawing back from a 0.9% drop early. Sixteen constituents closed in the red. The 50-share NSE index closed down 0.4% at 4,808.60.
The benchmark had risen 5.6% in the previous six sessions and had doubled last Tuesday from its March low.
“Although consumer demand has revived, a weak monsoon and inflationary pressures will limit further surprises,” N Krishnan, analyst at CLSA India, said in a note.
Private-sector lender ICICI Bank led the losers, falling 1.2% to Rs825.55 after rising 13.5% in the previous six sessions.
Leading engineering and construction firm Larsen & Toubro shed 1.2% to Rs1,607.75.
State Bank of India led the gainers, rising 1.95% to Rs1,956.15 on expectations the top lender will report robust second-quarter earnings.
Last week, its chairman had said the bank was likely to see 30-35% growth in earnings in the current quarter.
Tata Steel, the world’s eighth-largest steel maker, firmed 2.1% to Rs479.10 on rising demand hopes, and top automaker Maruti Suzuki gained 0.6% to Rs1,475.35 on strong car sales.
Data on Friday showed factory output grew for a seventh month in July and India’s reservoirs and prospects for winter crops were boosted after the weather office said the monsoon delivered the season’s heaviest rain in the past week.
Foreign funds have moved $8.75 billion into Indian equities so far this year, with $448 million coming between 1-10 September.
The investment has helped the BSE index climb about 68% this year, after sliding more than half in 2008 when foreigners had pulled out over $13 billion.
“While companies are still cautious on investment, we see enabling conditions for an upturn,” Krishnan said, adding this, along with a broader recovery in the first half of calendar 2010, will drive the next leg upgrades.
In the broader market, gainers led losers in a ratio of 1.1:1 on relatively moderate volume of 410 million shares.
Asian shares fell, with a rising yen driving down Tokyo shares. In Europe, the sentiment was weak with FTSE 100 down 0.7% at 4:08pm.