Mumbai: Indian shares fell 0.5% in choppy trade on Wednesday, their third straight fall, as investor caution spread across Asia and Europe following a slide on Wall Street overnight on concerns about the US financial sector.
Major losers included private-sector lender ICICI Bank, which fell 1.2% to Rs736.10, and engineering and construction firm Larsen & Toubro that dropped 1.1% to Rs1,533.50.
“It looks like the market is headed for a correction over the next week or so,” R.K. Gupta, managing director of Taurus Mutual Fund, said. “The market is consolidating as there is not much fresh money coming in right now.”
However, No. 2 telecoms firm Reliance Communications gained 4.6% to Rs276.05, after it said on Tuesday it had repaid early more than $1 billion of loans, about one-fifth of its outstanding loans, and could repay more debt ahead of schedule.
The company’s telecoms tower unit has revived its initial public offer plan and is looking to raise up to Rs50 billion ($1 billion), the Business Standard reported.
The 30-share BSE index ended down 0.54%, or 83.73 points, at 15,467.46 points, its worst close since 21August, with 21 stocks declining. The index rose as much as 0.5% during trade. The 50-share NSE index fell 0.4% to 4,608.35.
Energy giant Reliance Industries, which has the most weight in the main index, ended down 0.5% at Rs1,971.75.
Top telecoms firm Bharti Airtel, which is in exclusive merger talks with South Africa’s MTN, eased 2.1% to Rs412.65.
Leading power-equipment maker Bharat Heavy Electricals shed 2.7% to Rs2,201.20.
“The market is trying to find its feet after the recent rally,” Sonam Udasi, vice president of research at BRICS Securities, said.
“Definitely now there are signs of fatigue, but longer term, the prospects are still in place.”
The BSE index has fallen 2.85% over the past three days as profit-taking emerged in equity markets worldwide, after rising for seven straight days for the first time in 4-months.
Morgan Stanley said it had cut India’s economic growth forecast to 5.8% in 2009/10 from its earlier projection of 6.4%, in anticipation of a drop in agricultural output.
Analysts say a rush of liquidity pouring into emerging markets will support stocks in the near term as investors look to buy on dips even though worries about a weak monsoon, high valuations and looming inflation weigh.
“World over economists seem to be in a dilemma. On the one side, it looks like conditions are improving, but on the other hand there are those who say we are headed for much worse,” Udasi said.
Manufacturers from several countries including the United States produced some upbeat news on Tuesday, indicating that a recovery from the deepest global downturn since World War II is slowly gaining traction.
Some fretted, though, that the recovery leans too heavily on expensive government efforts - from the popular US “cash for clunkers” auto sales incentives to a pre-election propping up of Germany’s labour markets.
And the reports were not enough to support global equities, which fell heavily on worries that investors have gotten ahead of themselves in pricing in a recovery.
In the broader market, losers led gainers 1,609 to 1,177 on average volume of 439.7 million shares.
Most Asian markets were lower, with Japan’s Nikkei falling 2.4%, while MSCI’s measure of other Asian markets was down 1.4%.