Mumbai: Indian shares gave up nominal gains to close 0.15% lower on Monday, as weak global sentiment caused by disappointing U.S. economic data and corporate revenues outweighed robust domestic economic growth and earnings expectations.
Reliance Communications jumped as much as 3.9% after Financials Times reported Emirates Telecommunications Corp (Etisalat) was close to buying a 26% stake in the No. 2 Indian telecoms firm.
Second-largest private sector lender HDFC Bank climbed 0.6% to 2,050.35 after it reported a 34% rise in its June-quarter net profit and met the street view.
The 30-share BSE index shed 27.40 points to 17,928.42, with 19 of its components closing in the red. The 50-share NSE index fell 0.1% to 5,386.45 points.
“Expectations of robust results from companies capped losses,” said Prakash Diwan, head of institutional business at Networth Stock Broking.
Iron ore exporter Sesa Goa gained 1.8% ahead of its quarterly earnings announcement, dealers said.
“But it remains to be seen if these expectations are met and also if the companies hint at better quarters ahead,” Diwan said, adding, the long-term outlook for the market was positive, with structural reforms by the government and regulators also helping.
Earlier in the day, a panel set up by the stock market regulator recommended lifting the mandatory open offer size to 100% from 20% now, making it easier for minority shareholders to participate in open offers arising from mergers and acquisitions.
The Securities and Exchange Board of India’s takeover panel also suggested raising the trigger point for open offers to 25% from 15%.
Foreign portfolio inflows of $8.5 billion so far in 2010 have powered Indian share gains, adding to record $17.5 billion purchases in 2009, which had helped the index rally 81%.
The benchmark has outperformed its emerging market peers and is the only one among BRIC countries to post a positive return so far in 2010.
Sensex has risen 2.7% so far this year while its emerging market rivals China’s Shanghai Composite Index, Brazil’s Bovespa and Russia’s RTS index have shed between 3.5% and 24.5%.
“However, if things overseas deteriorated, we can see money pulled out in a knee-jerk reaction. On a long-term basis though, India stands to gain as a better investment avenue,” Diwan said.
Reliance Communications closed 2.2% higher at Rs191.25.
Financials mostly traded higher on expectations that strong economic growth in the world’s second-fastest growing major economy after China, would trigger demand for loans.
Sector majors State Bank of India, mortgage lender Housing Development Finance Corp and HDFC Bank were trading close to their all-time highs.
SBI and HDFC closed 0.6% and nearly 1% higher respectively.
Export-focused outsourcers dipped on concerns disappointing economic data from the United States, their biggest market, could affect order flow.
Sector leader Tata Consultancy Services declined nearly 1%, while rival Infosys Technologies shed 0.3%.
Non-ferrous metals producer Sterlite Industries declined 1.5% as Shanghai copper dipped 1.5%.
Energy giant Reliance Industries, which has the highest weight on the Sensex, dropped 0.6%.
The Daily News & Analysis newspaper reported Reliance was in talks with Texas-based Quicksilver Resources, including for a possible buyout of the U.S. firm that develops shale gas and coal-bed methane.
In the broader market, advancing shares outpaced declining ones in a ratio of 1.1:1 on relatively lower volume of 360 million shares.
At 4:12pm, NSCI’s index for world equities was down 0.1% while MSCI’s measure of Asian markets ex-Japan was 1% lower.
Tata Steel, the world’s seventh-largest producer of the alloy, rose 0.4% to Rs511.45 as UBS upgraded the stock to “buy” from “neutral” over the weekend.
Sun Pharmaceutical shed 1.1% to Rs1,721.15 after the drugmaker said a US court had denied its motion to reverse a jury verdict of infringement against the Indian firm on Pfizer’s Protonix acid reflux drug patent that the jury had said was valid.
Lender Canara Bank rose as much as 7.5% to its record high at Rs514.60, after it posted an 82.5% jump in its April-June net profit.
The stock closed nearly 4% higher at Rs497.70.