Mumbai: Indian shares fell 0.8% on Thursday as intensifying turmoil in Libya led to a surge in oil prices, and traders expected the market to be wedged in a tight range in the near term as developments unfold in the Middle East.
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Financials contributed the most to the losses.
Negative news from overseas including surprisingly weak trade data from China and Moody’s downgrade of Spain also hit investor sentiment, pushing them away from riskier bets.
Brent crude surpassed $116 after forces loyal to Libyan leader Muammar Gadhafi bombed oil industry infrastructure, inflicting longer-term damage on the country’s exporting capacity.
The 30-share Bombay Stock Exchange (BSE) index declined 0.77%, or 141.97 points, to 18,327.98 points, with 21 of its components closing in the red.
It is down 10.6% this year, as foreign funds sold a net of around $1.8 billion (Rs8,118 crore) from Indian stocks since the start of the year to 8 March.
“All possible bad news seem to be coming in today. But, most of them are already in the price,” said Rakesh Rawal, head of private wealth management at Anand Rathi Financial Services Ltd.
“Every time the market lifts up its head, there is some bad newsflow that comes in to batter it,” he said, adding he expects the 50-share Nifty to trade in a range of 5,300-5,500 points until the end of March.
The NSE index, or Nifty, closed 0.7% lower at 5,494.40.
Losers beat gainers in the ratio of 1.2:1 in the broader market.
Around 294 million shares changed hands on BSE, higher than the 30-day daily average volume of 281 million shares.
Lenders dragged on concerns that already worrying inflation could rise further if oil prices stayed firm. The banking sector index dropped 1.2%.
The Reserve Bank of India reviews its monetary policy next week, and is widely expected to hike key rates after raising them seven times since last March to battle stubborn inflation.
Leading lenders State Bank of India, ICICI Bank Ltd and HDFC Bank Ltd fell between 0.2% and 1.9%.
Airline companies are staring at declining profits or probable losses in the January-March quarter as a sharp spike in crude prices and inability to pass on high costs erode margins in a traditionally weak quarter, analysts said.
Carriers Jet Airways (India) Ltd and Kingfisher Airlines Ltd dropped 1.8% and 1.1%, respectively. SpiceJet Ltd bucked the trend and rose 1.3%.
State-run oil marketing companies such as Indian Oil Corp. Ltd, Bharat Petroleum Corp. Ltd and Hindustan Petroleum Corp. Ltd shed between 0.6% and 1.3%.
Oil explorer Cairn India Ltd edged 0.2% higher, as a rise in crude oil prices would boost its revenues.
Base metal prices fell in Shanghai on weak China import data and fears the rising oil prices may derail global economic growth.
Metal producers Sterlite Industries India Ltd, Hindalco Industries Ltd and Tata Steel Ltd dropped between 0.8% and 2.6%.
Separately, global miner Rio Tinto Plc raised its offer for coal miner Riversdale Mining Ltd with a final bid of $3.9 billion. Tata Steel, world’s seventh largest steel producer, is the biggest shareholder in Riversdale.
Riversdale chief executive Steve Mallyon said momentum among institutions in support of the offer was building but he didn’t know how the two biggest shareholders, Tata Steel and Brazil’s CSN, would respond.
The FTSEurofirst 300 index of top European shares was down 0.7% by 1033 GMT, while the MSCI’s measure of Asian markets other than Japan shed 1.4%.
Top-listed retailer Pantaloon Retail (India) Ltd closed 1.5% higher at Rs269.50, after its managing director Kishore Biyani told reporters the company has hiked prices of its branded apparel by 18% from this month.
Acropetal Technologies Ltd, an outsourcing services company, was listed on BSE at a premium of over 44% over its issue price of Rs90 apiece.
The stock erased some of its gains and closed 9.4% higher at Rs98.45.
Graphic by Sandeep Bhatnagar/Mint