Midsession: Financials lead markets down 3%

Midsession: Financials lead markets down 3%
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First Published: Wed, Jul 08 2009. 02 41 PM IST
Updated: Wed, Jul 08 2009. 02 41 PM IST
Mumbai: Indian shares fell more than 3% on Wednesday after a global markets slide on the back of doubts about world economic recovery triggered concern about foreign fund flows.
Financial stocks fancied by foreign portfolio investors led the drop. Volume was moderate, but losing stocks outnumbered gainers in the ratio of more than 4:1.
Auto stocks bucked the trend on rising car sales and hopes the government’s focus on the farm sector would boost demand for tractors and utility vehicles, and increased allocation for urban schemes will help sales of buses, traders said.
Tractor and utility vehicle maker Mahindra and Mahindra, truck and bus leader Tata Motors and No. 1 car producer Maruti Suzuki rose 0.2-1.7%.
By 3:01pm, the main stock index was trading down 404.30 points, at 13766.15 points, with all but 4 of its components in the red. It fell as low as 13,701.76. The broader 50-share NSE index was down 125.35 at 4,076.80.
“The market could dip further as there are no positives in sight to pull it up given the negative global cues,” said Mehul Dedhia, assistant vice-president at brokerage firm Sharekhan.
The stock index had fallen 5.8% on Monday after the government budget disappointed investors, but pulled back mildly on Tuesday.
Still, the benchmark is up 43 percent so far this year, largely driven by net foreign fund inflows of $5.2 billion.
Jigar Shah, senior vice-president at Kim Eng Securities, said foreign funds were not negative on India but there were worries.
“Fresh concerns on the momentum of recovery in the global markets is what is affecting their overall investment globally,” he said.
Traders said investors turned wary about financial stocks after State Bank of India chairman O P Bhatt said on Tuesday interest rates could harden in six months as demand for loans picks up.
Shares in Housing Development and Finance Corp dropped 3.6% to Rs2,279, State Bank fell 3% to Rs1,587 and ICICI Bank shed 6% to Rs653.10.
Asian markets were trading lower on Wednesday with Japan’s Nikkei share average and oil prices hitting six-week lows as investors pulled funds out of bets on the global economy’s recovery and favoured safe havens, such as the US dollar and government bonds.
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First Published: Wed, Jul 08 2009. 02 41 PM IST
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