Mumbai: Indian shares were slightly lower on Wednesday morning, with banks extending losses on fears the central bank may tighten monetary policy sooner than expected given concerns about rising inflation.
The Reserve Bank of India might tighten monetary policy in December as inflation could rise to near 7% in March, the prime minister’s economic adviser, C. Rangarajan, was quoted as saying in a report.
Top lender State Bank of India shed 0.9% to Rs2,161.05 and smaller rival HDFC Bank dropped 1% to Rs1,680.90.
“For banks, it’s more of sentiment being beaten after inflation data showed a spike,” said Rakesh Rawal, head of private wealth management at Anand Rathi Financial Services.
“But the long-term prospects of our banks continue to be good,” added Rawal.
At 11:15am, the 30-share BSE Index was down 0.1% at 16,861.02, with 17 components declining. The 50-share NSE index was down 0.2% at 5,023.45.
The market has shed 1.6% so far this week. It is up around 75% so far in 2009, and is set to post its best gains since 1991, powered by robust foreign fund inflows.
“Market prices are liquidity driven in the short run, and there is ample liquidity here in India as well as globally,” Rawal said.
“People will be looking for growth assets and I don’t think there are too many interesting opportunities like India,” he added.
Leading mobile operators Bhhrti Airtel and Reliance Communications bucked the trend and rose 1.9% and 1% respectively.
IT bellwether Infosys Technologies climbed 0.3% to Rs2,514.60 rupees. A senior company official told Reuters the company expects revenue growth in the fiscal year starting in April to be better than 2009/10 as a recovery in the global economy spurs investments by its clients.
In the broader market, losers led gainers in the ratio of 1.2:1 in a volume of 98 million shares.