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Indian shares drop 0.6% on weak global cues

Indian shares drop 0.6% on weak global cues
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First Published: Mon, Aug 16 2010. 04 37 PM IST
Updated: Mon, Aug 16 2010. 04 37 PM IST
Mumbai: Indian shares on Monday shed 0.6% on weak global peers as a weaker-than-expected gross domestic product data from Japan added to concerns over a faltering global economic recovery.
Reliance Communications slid as much as 4.6%, as India’s No. 2 mobile operator disappointed investors with a bigger-than-expected fall in quarterly profit, as sharply lower call charges after a vicious price war hit margins.
Credit Suisse cut the target price on Reliance Communications to Rs170 from 185 rupees, while maintaining a “neutral” rating on the stock.
The 30-share BSE index dropped 116.25 points to 18,050.78, with 23 of its components closing in the red. The 50-share NSE index fell 0.6% to 5,418.30 points.
It is up 3.4% so far in 2010, outperforming the broader MSCI’s index of Asian shares ex-Japan and emerging markets index which have fallen 2.7% and 0.9% respectively year to date.
“Market is not going anywhere. It is just consolidating. There are no major negative or positive factors currently,” said Vaibhav Sanghavi, director at Ambit Capital.
“Weak data from economies like the US imply stimulus will stay for a while and hence, liquidity flow will continue too.”
Foreign funds have invested a net of $11.4 billion in Indian stocks year to date, a portion of which was absorbed by the primary market.
SKS Microfinance, India’s largest microlender that raised about $358 million in an initial public offering, rallied as much as 17.8% on debut.
The stock closed at Rs1,088.58, compared with an issue price of Rs985 per share.
Oil explorer Cairn India declined 6.4% as miner Vedanta Resources said it will acquire a 51% to 60% stake in the Indian firm. India’s largest iron ore exporter Sesa Goa will hold 20% in Cairn India.
“All the positives currently seem to be priced in. There is no near-term benefit for Cairn India shareholders from this deal, which is why the stock is coming off,” said Neeraj Dewan, director of Quantum Securities.
“Sesa Goa is under pressure as it will face an outgo towards stake buy. Sterlite is moving up, on relief it is not a part of the deal.”
Non-ferrous metals producer Sterlite Industries, which is a unit of Vedanta, was almost flat at 160.60 rupees after declining 4.3% last Friday. Sesa Goa shed 8.9%.
Financials dropped even as the annual headline inflation eased more sharply than expected to high single digits after five months, but a top government adviser said it was still high and unacceptable.
Top lender State Bank of India fell 1.02% while leading private lenders ICICI Bank and HDFC Bank dropped 1.9% and 0.2% respectively.
Drugmaker Cipla shed 3.6% after it reported a 6.2% rise in its June quarter net profit last Friday.
“The much-awaited rise in revenue still seems at least a year away, given the heavy FY07-10 capex, and visibility remains limited,” Credit Suisse said in a note on Cipla.
In the broader market, declining shares outpaced advancing ones in a ratio of 1.3:1 on a volume of 418.6 million shares.
At 4:07pm, the FTSEurofirst 300 index of top European shares was down 0.4% while MSCI’s measure of Asian shares other than Japan shed 0.4%.
STOCKS
Suzlon Energy tumbled as much as 9.3% to Rs51.20, its lowest since April 2009, after the wind turbine maker said late Friday June quarter loss widened to Rs912 crore from 4.53 billion a year ago. The stock closed 7.3% lower at Rs52.35.
Lanco Infratech rose 2.6% to Rs70.15, as the infrastructure developer said its April-June net profit jumped 68%.
Simplex Infrastructures climbed almost 5% to Rs500.40 as its June-quarter net profit rose 41%.
Glenmark Pharmaceuticals firmed 0.5% to Rs268.05 as the drugmaker said it had received approval from US FDA for trospium tablets.
McNally Bharat Engineering dropped 4.1% to Rs285.20 after the firm said it was in talks with upto three western European countries for acquisitions and was looking to spend up to $40 million to $50 million.
Real estate firm Ackruti City climbed 1.4% to Rs540.60 after its June-quarter net profit rose 89% to Rs136.3 million.
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First Published: Mon, Aug 16 2010. 04 37 PM IST
More Topics: India | Stocks | Markets | BSE | NSE |