Mumbai: Indian shares fell 2% on Thursday, the most in more than three weeks, led by losses in banks as investors unwound positions on the last day of monthly derivatives taking cues from lower world markets.
Debt problems in Dubai raised fresh concerns about the global financial system and send banks sliding in Europe.
“Our market was pulled down as global markets were in the red,” said Kunal Sukhani, manager of institutional equities at Asian Markets Securities.
“Investors were unwinding their long positions in banking and metal stocks on expiry,” he said.
Private-sector ICICI Bank shed 3.7% to Rs865.50 while larger rival State Bank of India fell 3% to Rs2,252.95.
The 30-share BSE index dropped 344.02 points to 16,854.93, its lowest close in a week. Twenty-six components lost ground. The 50-share NSE index fell 2% to 5,005.55.
“The rally in Indian market this year was mostly driven by gush of liquidity,” said Ved Prakash Chaturvedi, managing director of Tata Asset Management. “So if there is a trend reversal in global liquidity, we could see trouble.”
The BSE index has risen three-quarters this year on the back of foreign portfolio inflows of more than $15 billion.
Reliance Industries, which has the most weight in the index, fell 2.9% to 1,064.60 rupees as the energy major began trading ex-bonus. The company had set one bonus share for every held.
Tata Steel trimmed losses to 3.3% at Rs543.45 after the world’s No. 8 steel maker said, said it expects a sharply better performance in the second half of the financial year.
The stock had fallen as much as 5.9% during trade after the company reported a consolidated quarterly net loss, hurt by the weak performance of its European unit Corus.
Outsourcer Infosys Technologies shed 1.9% to Rs2,386.85 as investors took profits after the bellwether touched an all-time high on Wednesday.
Mahindra Satyam fell to a four-month low, before recovering, on concerns over its outlook after investigators filed new charges over accounting fraud that hit Satyam earlier this year.
Cigarette-to-hotel group ITC lost 2.9% to Rs261.10, after 259,923 shares changed hands in block deals on the National Stock Exchange at Rs266.35.
ITC is open to raising its holding in EIH, which runs the Oberoi hotel chain, newspapers reported on Thursday, citing ITC’s chairman.
EIH closed 4.5% higher at Rs138.60.
In the broader market, losers were more than double the number of gainers on relatively lower volume of 349 million shares.