Mumbai: Indian shares drifted lower on Thursday in choppy trade as investors were reluctant to build fresh positions ahead of the year-end amid global economic uncertainties.
Traders said firmer Asian shares and an upbeat outlook for domestic stocks in the coming year failed to hold the market up as the mood was towards locking in the gains.
However, shares in export-driven outsourcing firms including Infosys Technologies rose as much as 1.3% on hopes that US President Barack Obama’s move to extend tax cuts would help the US economy in the near term.
India’s top software services exporters get about half their revenue from the United States.
By 11:09 am, the 30-share BSE index was trading 0.2% lower at 19,660.19, with 19 of its components in the negative. The index fell as much as 0.5% in early trade after rising 0.3% in opening deals.
“People are quite circumspect right now and there is not much of new buying happening at these levels,” said Ambareesh Baliga, vice president of Karvy Stock Broking. “The overall market mood will remain sluggish and fund flows will slow because of the holiday season.”
Foreign funds dumped $93.6 million worth of local shares on Tuesday, after having been net buyers in the six preceding sessions. Still, total foreign fund flows into local shares stands at a record $29.2 billion this year.
The outlook for domestic shares is upbeat for the new year, thanks to a fast-growing economy and strong corporate earnings that should boost foreign portfolio inflows, a Reuters poll showed on Wednesday.
Analysts forecast the benchmark index to climb nearly a fifth in 2011 from Wednesday’s close. The index is up 12.6% so far this year.
Shares in top software exporter Tata Consultancy Services rose 1.2% to Rs 1,092.10 and third-ranked Wipro was trading up 0.6% at Rs436.55 on a positive outlook for the world’s largest economy.
Asian stocks rose on hopes added fiscal stimulus will help the US economy in the near term.
Most financials extended their losses on lingering worries lending rate hikes by banks and mortgage lenders would hurt the demand for credit by corporate and retail borrowers in Asia’s third-largest economy.
Top lender State Bank of India was trading down 1.8% at Rs2,758.55, while leading mortgage lender Housing Development Finance Corp dropped 1.8% to Rs672.75.
In the broader market, losers were nearly 3 times the number of gainers on volume of 131 million shares. The broader 50-share NSE index was down 0.22% at 5,890.30.