Mumbai: Shares briefly extended losses to 1% on Friday afternoon, as traders locked profits after a rally in March.
At 2:50pm, the 30-share BSE index was down 1% at 19,393 points, with 27 components declining. The 50-share NSE index was down 1.1% at 5,822.90.
Outsourcers such as Tata Consultancy Services , Infosys Technologies and Wipro , which get most of their revenue from exports, also fell as a strengthening rupee was seen hitting their margins.
The rupee has appreciated 4.3% against the dollar from its 2011 low at the end of January.
At 10:43am, the 30-share BSE index was down 0.49% at 19,494.88 points, with 24 components declining. It had started higher. The 50-share NSE index was down 0.6% at 5,859.95.
Rising global oil prices also weighed as they had the potential to fuel inflation in a country that imports more than two-thirds of the oil it consumes.
US and Brent crude futures climbed to their highest in 2-1/2 years on supply worries stemming from attacks on Libyan oil fields and unrest in the Middle East.
Losers outnumbered gainers in the ratio of 1.8 to 1, while 168 million shares changed hands on the BSE.
“We have been faltering for the previous three sessions. Though it is too early to say, it raises a doubt on the sustainability of the rally we saw in March,” said Ambareesh Baliga, chief operating officer at Way2Wealth Securities.
The main index had jumped 9.1% in March, posting its biggest gain in six months.
“Flows are good. But it’s not a good idea when we see a swift rally without the fundamentals really changing,” Baliga said.
Foreign funds have bought shares worth nearly $3 billion since the beginning of March, on a view most negatives were already priced in after the decline in the first two months of 2011.
Automobile companies pulled back after the rally in March. Tata Motors , Maruti Suzuki , Mahindra & Mahindra and Bajaj Auto dropped between 1.1% and 2.1%. The sector index dropped 1.2%, but is up 14.7% since the end of February.
Tata Consultancy, Infosys and Wipro shed between 0.5% and 2.1%.
Cigarette-to-hotels business ITC gained 0.6% as investors place their bets on strong domestic consumption.
State-run oil marketing companies Bharat Petroleum Corp , Hindustan Petroleum Corp and Indian Oil Corp fell between 2.3% and 2.9% as high world oil prices squeeze their margins.
Tecpro Systems gained 2.4% to 314.35 after the material handling and engineering, procurement and construction firm said it got orders for waste heat recovery-based power plants worth Rs 224 crore.