Mumbai: Indian shares fell as much as 2% in choppy trading on Friday morning, with traders saying expectations of an interest rate cut and an industry assistance package had been factored into Thursday’s 5.5% surge.
Stocks of outsourcing firms led the losses on a deteriorating outlook for their key US and European markets, and the general economic gloom weighed on the broader market despite expectation authorities would unveil a stimulus package over the weekend.
Leading software-services exporter Tata Consultancy Services dropped 3.6% and second-ranked Infosys Technologies tumbled 4.1%. Satyam Computer Services and Wipro fell 3.2% and 2.5% respectively.
At 11:25am, the 30-share BSE index was down 1.05% at 9,132.57 points, with 19 components in the red. It later extended losses to 2%.
In the broader market, gainers led losers by a ratio of more than 2:1 on a volume of 101 million shares.
Financial stocks gained as expectations of a rate cut grew after inflation fell to seven-month low and the central bank announced a press conference for noon on Saturday.
State Bank of India rose 0.9% and ICICI Bank was up 1.7%.
Along with the rate cuts, the government is expected to announce a stimulus package for certain sectors. The government is planning excise duty cuts for the automobile sector and also a package for the infrastructure sector, according a a senior government official.
The 50-share NSE index was down 0.81% at 2,765.55 points.