Mumbai: Indian shares dropped 0.3% on Tuesday, snapping a five-day winning streak, as gloomy world markets and concerns over Greek debt triggered profit taking.
Banks, energy major Reliance Industries and top carmaker Maruti Suzuki fell, while state-run explorer Oil & Natural Gas Corp rose.
“It is difficult to set a trend for the near term,” said Vaibhav Sanghavi, director of Ambit Capital. “It looks like we will consolidate for a while. Stock picking is the key rather than concentrating on broader market.”
The 30-share BSE index, or Sensex, shed 0.31% or 54.66 points to 17,690.62, with two-thirds of its components closing in the red. It had gained nearly 2% over five previous sessions. The 50-share NSE index closed 0.3% lower at 5,308.35.
Foreign funds have pumped $6.1 billion so far this year into Indian equities pushing the benchmark up 1.3%. The benchmark had soared 81% in 2009 on the back of a record $17.5 billion portfolio inflow.
Sanghavi said sales may be buoyant for companies in the current quarter, but rising input costs could bite into their margins as was the case in March quarter.
Maruti extended losses, falling 3.9% to Rs1,283.15, its lowest close in more than 8 months. On Monday, the firm missed forecasts for fourth-quarter net profit and warned of margin pressure and slower sales growth this year in the fiercely competitive compact car market.
“We find risk-reward less favorable in light of rising commodity prices and competitive pressures,” Morgan Stanley analysts Binay Singh and Shreya Gaunekar said in a note, and lowered their rating to equalweight from overweight.
ONGC climbed 2.9% after the Business Standard newspaper reported India plans to more than double the price of gas produced by the oil and gas explorer to $4.2 per million British thermal units.
The bank sector index declined 0.9% after rising 5.9% over five sessions.
ICICI Bank, the country’s second-largest lender, eased 1.4% after its quarterly earnings on Saturday failed to match street expectations. HDFC Bank, which hit a record high Monday, shed 0.6%.
Reliance Industries, which has the highest weight on the Sensex, fell 0.8% to 1,061.10 rupees, extending losses after its quarterly profit rise of 30% lagged forecasts.
“Slower upstream growth and weak downstream margins will lower returns which could erode RIL’s valuation premium,” Sanford C. Bernstein analysts said in a note.
“Moreover non-value adding acquisitions as highlighted by the Atlas deal remain a concern to us,” they wrote, downgrading the stock to marketperform from outperform.
Non-ferrous metals producer Sterlite Industries and Hindalco shed 1.6% and 0.4% respectively as base metal prices declined in London and Shanghai
In the broader market, losers led gainers in a ratio of 1.2:1 with 414 million shares changing hands on the BSE, higher than that on Monday.