New Delhi: Markets ended 0.5% lower on Wednesday after a heady rebound in the previous session as investors waited for more clarity on European policymakers’ plans to resolve the euro zone debt crisis.
Lenders such as ICICI Bank and State Bank of India were among the big losers after they had rebounded sharply on Tuesday, indicating investors were far from convinced about the outlook.
The 30-share BSE index closed down 0.47% at 16,446.02, with 21 components declining. It had gained nearly 3% on Tuesday.
Tuesday’s rebound after a four-day slide was triggered by optimism about a plan being putting together to contain the euro zone debt problem, said Vikas Khemani, president at Edelweiss Capital in Mumbai .
“Now, investors are watching if the plan can get through,” he said.
Rallies in the Asian and European markets came to a halt on Wednesday following reports that the rescue plans face opposition in Germany and there were signs of a split within the currency bloc over the terms of Greece’s next bailout.
“Investors are cautious,” said Ambareesh Baliga, COO at brokerage Way2Wealth in Mumbai. “Whatever short-covering had to happen, happened yesterday.”
“There is still some hope that European leaders will pull through a rescue plan. No one wants economies to go under.”
The benchmark index has lost about a fifth this year, making it one of the worst performing major markets. Foreign funds have been net sellers of $209 million of shares until Tuesday in September .
Tata Consultancy Services , the top software service exporter in India’s flagship $76 billion software services industry, ended up 0.71% at 1,047.90 rupees, while No. 2 Infosys gained 1.07% to 2,470.25 as a weak rupee boosted their earnings outlook.
The rupee has dropped about 10% from its peak in July this year.
Highly leveraged Kingfisher Airlines rose as much as 2.7% after its chairman said the company will exit competitive low-cost segment, and sell and lease back about 35 planes.
Kingfisher gave up the gains to close 1.59% lower at Rs 24.70.
No. 2 lender ICICI Bank fell 1.95%, while larger rival State Bank of India shed 1.4%. The bank index ended down about 1.25%.
India raised interest rates earlier this month for the 12th time in 18 months to 8.25% and signalled more was to come. Rates now stand at 8.25% and a Reuters poll of analysts shows one more hike is expected this year. .
Top car maker Maruti Suzuki shed 2.5% and utility vehicle maker Mahindra and Mahindra slipped nearly 1%.
Auto stocks have been under pressure this year as demand for cars in the world’s second-fastest growing auto market after China has been dented by high fuel prices and interest rates .
Shares in steelmaker JSW Steel slumped 6.5% to Rs 570.65 after its vice chairman said on Tuesday a 10-million-tonne plant in southern India, working now at 30% capacity, may have to shut if ore supplies did not improve.
HDFC Securities lowered its price target on the stock to 566 rupees from Rs 657.
Oil and gas explorer Cairn India rose as much as 3.6%, a day after the board of Oil and Natural Gas Corp decided to issue a no-objection certificate for London-based miner Vedanta Resources’ deal to buy a majority stake in Cairn India.
The stock closed 0.12% lower at Rs 279.90.
The 50-share NSE index closed down 0.51% at 4,945.90. There were two losers for every gainer in the broader section, with 523 million shares changing hands.
The MSCI’s broadest index of Asia Pacific shares outside Japan was up 0.33%, while Japan closed up 0.07%.
Shree Renuka Sugars Ltd fell as much as 4.8% after Morgan Stanley downgraded the stock to “equal weight” from “overweight” and nearly halved its target price, citing lower international sugar prices and uncertainty over domestic sugar production. It closed 3.9% lower at Rs 55.45.
Ashok Leyland rose as much as 3% after India’s second largest commercial vehicle maker said it expects its joint venture with Japan’s Nissan Motor to sell 55,000 light commercial vehicles in the first year of sale, following a launch on Wednesday. It closed 1.71% up at Rs 26.70.