Mumbai: Rising local interest rates and Greek contagion worries led to a flight to safety, sending Markets tumbling to fresh three-week closing lows on Friday, with dealers predicting more pain to come.
The main index which posted its worst weekly fall in six, closed 0.6% lower. It shed 2.2% this week, its second straight weekly decline.
Export-oriented software firms were the top losers on concerns that a global economic slowdown would hit their revenue.
Other technology stocks in Asia such as Samsung Electronics also tumbled on fears the sputtering global economy threatens to crimp demand.
Steelmaker Tata Steel bucked the trend and closed 3.6% higher after it agreed late Thursday to sell its 26% stake in Australia’s Riversdale to Rio Tinto for $1.1 billion.
The 30-share BSE index declined 0.64%, or 115.35 points to 17,870.53 - its lowest close since 25 May -with 18 of its components closing in the red.
“Right now, the situation is murkier due to the speed brakes on the road of economic growth,” said Sanjeev Patkar, director of research at Almondz Global.
“This road is already greasy with Greece woes. And, it is raining political woes.”
Foreign funds have sold Indian equities in four sessions to 15 June, with total outflows amounting to $235 million, as rising inflation, higher interest rates and slowing growth took the sheen off India’s growth story.
“There is still more pain to come. Globally, developments are not good,” said Sunder Subramaniam, senior manager of sales at brokerage Sharekhan.
“The index heavyweights like Reliance Industries, Infosys - are dragging, which are a worry.”
The central bank raised interest rates on Thursday for the 10th time in just over a year to combat stubbornly high inflation and signalled more increases to come even as growth in Asia’s third-largest economy is slowing down.
The 50-share NSE index declined 0.6% at 5,366.40 points.
Nearly three shares declined for every share that advanced in the broader market. Around 456 million shares were traded on the NSE, lower than its 90-day daily average volume of 602 million shares.
Top outsourcing firms Tata Consultancy Services tumbled 3.6% while rivals Infosys Technologies and Wipro fell 1.1% and 1.7% respectively.
Progress of the monsoon was closely monitored after the weather office said on Thursday rains were 9.0% below normal in the week to June 15.
The monsoon rains, vital for farm output in India’s trillion-dollar economy, hit the country’s southern coast on May 29 this year, three days ahead of schedule.
Energy giant Reliance Industries fell 2.1% to Rs 868.75, its lowest close since April 2009, on lack of positive triggers, dealers said.
Leading car maker Maruti Suzuki initially rallied 3.3% after a 13-day strike ended, but soon faltered and closed down 2.4% as the workers agitation at a plant in northern India had caused a production loss of more than $90 million.
The MSCI world equity index recovered from early lows and edged 0.3% higher by 1043 GMT, while the emerging markets equities index was down 0.4%.
Telecom service providers rose on hopes that operators could be considering a tariff hike following Tata DoCoMo’s decision to raise headline pre-paid tariffs in Tamil Nadu circle, three dealers said.
The tariff hike is the first in 12-18 months from any telecom operator in India, analysts said.
“We do not rule out such selective circle-by-circle headline tariff increases by other operators as they realize it is unsustainable to continue with such aggressive tariffs,” Goldman Sachs said in a note adding that it expects incumbents like Bharti Airtel and Idea Cellular to follow.
Bharti Airtel, Reliance Communications and Idea Cellular gained between 1.6% to 3.3%.
Max India closed 0.4% higher after it said its board approved buying 47.61 million shares of Max Healthcare at 29.4 rupees per share. Its shareholding in Max Healthcare will reach 91.84% post buy.