Mumbai: Indian shares declined 0.3% on Wednesday, with financials leading the fall, tracking the losses in world equities as initial euphoria over China’s yuan move wore off and euro zone concerns resurfaced.
Financials edged lower as investors locked in gains. The banking sector index was down 0.1%. It has gained 9.7% so far in 2010.
By 10:25am, the 30-share BSE Index was trading down 0.34% at 17,689.44 points, with 21 of its components declining. The 50-share NSE index was down 0.3% at 5,303.12 points.
“The market rose a little too fast earlier this month. The rally was not really warranted. We don’t know how much more pain is coming from Europe,” said Surekha Joshi, senior dealer for institutional equities at SPA Securities.
Euro zone concerns reappeared after French bank Credit Agricole pushed back profit targets for its struggling Greek unit Emporiki and said it would take a 400-million euro write-down as Greece fights its debt load.
That followed a ratings downgrade of French bank BNP Paribas by Fitch.
Foreign funds have bought around $1.4 billion of Indian equities so far this month, pushing the index 4.4% higher.
They had sold $2 billion of Indians stocks last month as euro zone concerns reduced their risk-taking capacity.
Top lender State Bank of India was down 0.9% while rival ICICI Bank shed 0.1%.
Leading mobile operator Bharti Airtel was up 1.1%, after declining 1.9% over the last three sessions.
Reliance Communications, the No.2 mobile operator, rose 0.9% after the Economic Times newspaper reported French media and telecom giant Vivendi is negotiating with the Indian firm to buy a 26% stake. Metals stocks extended losses after London copper futures edged lower.
Non-ferrous metals producer Sterlite Industries dropped 1.9% while aluminium producer Hindalco declined nearly 1%. Tata Steel, the world’s eighth-largest steelmaker, dropped 0.5%.
Engineering and construction firm Larsen & Toubro was down nearly 2.7%. The stock is still up nearly 9% so far in June.
In the broader market, gainers led losers in a ratio of 1.5:1 in a volume of 83 million shares.
Shoppers Stop extended gains and rose 11.2% to Rs531 as the retailer’s chief executive said on Tuesday it may make an announcement on its proposed qualified institutional placement in the next 60 days.
State-run oil marketing companies Indian Oil Corp, Bharat Petroleum Corp and Hindustan Petroleum Corp extended Tuesday’s gains and were up between 1.2% and 1.3% after the federal oil minister said a panel of ministers will meet on Friday to decide on fuel prices.
Weak oil prices also helped these stocks, dealers said.
Hindustan Dorr Oliver rose 2.7% to Rs124.40 after the company late Tuesday said it has signed a pact with Indian unit of SPIG S.p.A of Italy to jointly bid for cooling tower projects.