Mumbai: Shares were down 0.1% in choppy trade on Monday, with Anil Ambani group companies falling after two firms agreed with the market regulator to not invest in stocks until December 2012.
Late Friday, the Securities and Exchange Board of India said Reliance Natural Resources, which has been merged into Reliance Power, and Reliance Infrastructure shall not make investments in secondary market listed securities until December 2012 under a settlement reached with the regulator.
Reliance Infrastructure and Reliance Power dropped as much as 8% and 8.7% respectively.
Other Anil Ambani Group companies such as Reliance Communications, Reliance MediaWorks and Reliance Broadcast Network were down between 1.2% and 3.2%.
“It is a compromise settlement (by Anil Dhirubhai Ambani Group). Had they fought it out, it would have involved more time and the uncertainty and negative perception would have lasted longer,” Deven Choksey, managing director and CEO of K.R. Choksey Shares.
“That said, there will be some negative perception for now, leading to a correction and subsequent recovery thereafter.”
By 10:22am, the 30-share BSE Index was trading down 0.12% at 18,837.85 points, with two-thirds of its components declining.
Foreign funds have pulled out around $545 million from Indian equities this year until Thursday, with the BSE main index declining 7.5%.
Software companies rebounded after the recent decline. The IT sector index was up 1%, but was down 4.7% so far in 2010.
Leading outsourcers Tata Consultancy Services, Infosys Technologies and Wipro were down between 1.2% and 1.5%.
Tata Steel was down 0.4% at 619.20 rupees, as the world’s seventh largest steelmaker fixed a price band of 594-610 rupees a share for its follow-on public share sale.
Mortgage lender Housing Development Finance Corp was up 1.9%, as HSBC raised the stock to “overweight” from “neutral”, as it believes the recent correction offers an excellent entry point for investors.
The stock was still down 10% year to date.
In the broader market, losers outpaced gainers in a ratio of 1.3:1 in a volume of 61 million shares.
The 50-share NSE index was down 0.2% at 5,642.50 points.
The MSCI’s measure of Asian markets other than Japan was down 0.6% by 0303 GMT, while Japan’s Nikkei was barely changed.
State-run fuel retailers Bharat Petroleum Corp, Hindustan Petroleum Corp, Indian Oil Corp were up between 1.7% and 2.5% after they raised petrol prices by about 4.5% on Sunday citing rising global crude oil prices.
Top engineering and construction firm Larsen & Toubro was down 1% at Rs 1,692 ahead of its December-quarter earnings.
Private lender Axis Bank was up 1.6% at Rs 1,220.25 ahead of its October-December earnings.