Mumbai: Indian shares logged their biggest weekly loss in three months to close 1.3% lower on Friday, as investors were sceptical ahead of US Federal Reserve Chairman Ben Bernanke’s speech, which is likely to signal his views about the prospects for the world’s largest economy.
Financials led the losses on Friday as investors overlooked optimism over loan demand outlook and focused on high inflation that may prompt the central bank to continue with a tight monetary stance.
Tata Power fell the most in three months and dropped 2.6% after a source told Reuters late Thursday the top private-sector utility was in talks to buy a 50% stake in US-based power utility InterGen NV for $1 billion to $1.2 billion.
The 30-share BSE Index dropped 1.25% or 227.94 points at 17,998.41, its lowest close in August.
Twenty-six of its components closed in the red and the benchmark index dropped 2.2% this week.
“After the recent rally and outperformance relative to other markets, valuations were looking overheated. A correction at this time should be healthy,” said R.K. Gupta, managing director of Taurus Mutual Fund. “All eyes are set on Bernanke for what next from here.”
Foreign funds have poured in $12.7 billion into Indian equities, including primary market offerings. The main stock index has added 3.1% so far this year.
India’s benchmark index has outperformed its BRIC peers so far this year. Brazil’s Bovespa, Russia’s RTS index and China’s Shanghai Composite Index <.SSEC> are down 2.8% to 20.3% year to date.
In the broader market, more than two shares declined for every one that advanced, in a relatively lower volume of 419 million shares.
The 50-share NSE index dropped 1.3% to 5,408.70 points.
Top lender State Bank of India dropped 2.2% while leading private-sector banks ICICI Bank and HDFC Bank shed 2.8% and 1.7% respectively.
State-run explorer Oil and Natural Gas Corp rose 2.9% after its board approved an investment of $79.5 million for development of two areas in Mumbai High fields, off the country’s west coast.
The company also said it has discovered oil in an exploratory well, Vadatal-1, a block on India’s western onshore basin.
Export-oriented software companies were under pressure on nervousness ahead of Bernanke’s comments on the outlook for the US economy, which is one of their key markets.
Leading outsourcer Tata Consultancy Services declined 2.1% while smaller rivals Infosys and Wipro shed nearly 2% and 0.9% respectively.
Energy major Reliance Industries shed 0.7% as prevailing concerns over a delay in ramp up of gas production, and there were no near-term triggers in sight. The stock, which has the highest weight on the main index, is already down nearly 13% so far in 2010.
Amongst the broader indices, the MSCI world equity index was down 0.1% by 2:17pm, while the Thomson Reuters global stock index was barely changed.
The volatile emerging markets index declined 0.4%.
Havells India firmed 3.5% to Rs813.70 as the electrical appliances maker’s board approved a 1-for-1 bonus share issue.
Force Motors rose 1.7% at Rs492.50 as its chairman said late Thursday the truck maker will spend 10 billion to Rs2000 crore in two to three years on new products and capacity expansion.