Mumbai: Indian shares on Wednesday shed 0.6%, amid dented sentiment following China’s surprise move to raise interest rates late Tuesday, with Coal India’s initial share offering also acting as a drag.
Metal producers declined as base metals prices fell in London and Shanghai following a sell-off in the international market on Tuesday after China’s first rate rise since 2007.
The Chinese central bank’s move reflected concern about resurgent asset price and could mark the start of a more aggressive phase of monetary tightening in the world’s fastest-growing major economy.
The 30-share BSE index shed 0.56% or 110.98 points to 19,872.15, with 21 of its components losing ground. It flip-flopped during the day, having risen as much as 0.5%.
“I think China was one of the factors. Also, we had some jitters from the U.S.,” said Dipen Shah, senior vice-president of research for private client group at Kotak Securities.
“The market had run up a lot very fast, and there seems to be profit booking happening at higher level. We think this is healthy for the market.”
The benchmark index is up nearly 14% so far in 2010, with foreign funds pumping in $23.5 billion into Indian equities.
Coal India’s $3.5 billion public offering, the country’s largest-ever IPO, was covered 8 times by 3:00pm.
Non-ferrous metals producer Sterlite Industries and aluminium maker Hindalco dropped 3.5% and 1.7% respectively. Tata Steel, the world’s seventh-largest maker of the alloy, shed 2.8%.
Financials declined on concerns interest rates may rise further. Leading lenders State Bank of India and ICICI Bank shed 0.9% and 0.5% respectively.
HDFC Bank dropped 1.2% after the private-sector lender met street estimates with a 33-percent rise in quarterly net profit. The stock is up 37% year to date.
“The result was good. But it is already in the price,” said Neeraj Dewan, director of Quantum Securities. Mortgage lender Housing Development Finance Corp fell 2.8%.
Declining shares outpaced advancing ones in a ratio of 1.7:1 on a moderate volume of 430 million shares.
The 50-share NSE index slipped 0.8% to 5,982.10 points.
The MSCI’s all-country world index was up 0.1% by 1037 GMT, while MSCI’s emerging markets index dropped 0.1%.
Property developer Oberoi Realty Ltd listed at 280 rupees, a premium of 7.7% to its issue price of Rs260. It closed at Rs282.95.
HCL Technologies dropped 3% to Rs425.85 after the software firm said its September-quarter profit fell by a little more than a third from a year ago, as hiring expenses jumped sharply.
Bajaj Holdings and Investment, the parent of India’s No. 2 motorcycle maker Bajaj Auto, rose 2.4% to Rs871.20, after it said late Tuesday its July-September net profit nearly doubled.
Tyre maker Ceat slid nearly 4% to Rs161.80 after it said its September-quarter net profit declined more than 75%.
Yes Bank firmed 1.4% to Rs352.15, as the private sector lender said its July-September net profit rose 57.14%.