Mumbai: Indian shares erased early losses and closed barely changed on Monday, after better quarterly corporate advance tax numbers erased losses triggered by weak world markets and higher domestic inflation data.
Annual wholesale price inflation accelerated to 9.89% in February, the highest since October 2008 and well above the Reserve Bank of India’s end-March projection of 8.5%, making a rate increase by the central bank all but inevitable at its scheduled April policy review.
“This seals the case for rate hike so we expect both reserve ratio and interest rate hike on or before April policy meeting,” Ramya Suryanarayanan, an economist at DBS in Singapore.
Leading lenders State Bank of India and ICICI Bank shed 1.5% and 1.4%, respectively. Mortgage lender Housing Development Finance Corp declined 1.5%.
HDFC Bank bucked the trend and edged 0.6% higher.
The 30-share BSE index closed 0.01% or 1.63 points lower at 17,164.99, after falling as much as 0.6% in the day. The 50-share NSE index <dropped 0.2% at 5,128.90.
Half of its components closed in the green.
“Market recovered early losses after advance tax numbers showed that March quarter earnings for companies would be better than last year,” said Kunal Sukhani, manager of institutional equities at Asian Markets Securities.
The benchmark logged its fifth straight weekly gain last week, leading to concerns that the valuations may have turned expensive.
“Market is tired and exhausted now and is running out of steam,” said Arun Kejriwal, director of research firm KRIS said.
Companies such as Reliance Industries, ACC and Tata Consultancy Services(TCS) paid higher advance tax for the quarter ending March, over a year before, an income tax source said.
Energy giant Reliance Industries, which has the highest weight on the Sensex, climbed 0.6% to Rs1,027.75.
Export-focused software companies led the gainers. Sector leader TCS climbed 2.3%, while rivals Infosys Technologies and Wipro rose 1.1 and 2.7%, respectively.
“We hold a positive outlook on the sector, which is fuelled by an improving macro scenario, setting the stage for strong offshoring demand,” Ambit Capital said in a note on Friday.
The brokerage has a “buy” recommendation on Infosys and TCS.
Top vehicle maker Tata Motors climbed 0.9% as its group global sales rose 59% in February from a year earlier.
Oil and Natural Gas Corp declined 1.4% after a senior company official said the state-run explorer’s domestic oil output is seen at 24.9 million tonnes in the current financial year ending March, lower than the 25.76 million tonnes target.
In the broader market, declining shares outnumbered advancing ones in a ratio of 1.9:1 in a volume of 310 million shares, lower than Friday’s close.
World stocks traded weak, on concerns about monetary tightening in China and caution ahead of US and Japanese central bank policy meetings this week
By 4:09pm, the MSCI’s all-country world index was off 0.3%, with the pan-European FTSEurofirst 300 down 0.5% and MSCI’s measure of Asian markets other than Japan declining 1%.