Mumbai: Shares were down 0.3% on Wednesday morning and were set to post their eighth straight decline amid weak Asian markets, as investors absorbed a sharper-than-expected interest rate hike by the central bank.
Software companies were in the red after peer Cognizant Technology Solutions Corp forecast slowing growth as it projected second-quarter sequential sales growth of 6 percent, down from 17% in the year-ago quarter.
Leading outsourcers Tata Consultancy Services , Infosys Technologies and Wipro declined between 1% and 1.9%.
At 10:52am, the 30-share BSE index was down 0.27% at 18,485 points, with two-thirds of its components declining.
“Persistently high inflation, and now threats to the pace of economic growth are deterring investors,” said R. K. Gupta, managing director of Taurus Mutual Fund.
The Reserve Bank of India stepped up its fight against stubbornly high inflation on Tuesday, raising interest rates by a bigger-than-expected 50 basis points and vowing to battle price pressures even at the cost of some economic growth.
The 50-share NSE index or Nifty was down 0.4% to 5,540.50. Losers were more than double the number of gainers on a volume of 168 million shares on the NSE.
“I see support for Nifty at 5300 levels,” Gupta said.
Foreign funds have been sellers of Indian equities in five out of the last six sessions to 2 May, leading to concerns they were going to continue to be jittery about investing in Indian stocks.
They are still net buyers of more than $3 billion of Indian stocks since the start of March.
Top motorcycle maker Hero Honda dropped as much as 3.1% ahead of its fourth-quarter results.
Analysts on average expect the company to post a 14.9% drop in net profit to Rs 510 crore , according to Thomson Reuters I/B/E/S.
Auto stocks were battered as the interest rate increase added to woes of the sector already dealing with slowing sales growth.
Tata Motors , Maruti Suzuki , Bajaj Auto and Mahindra & Mahindra were down between 0.9% and 4.5%.
Metal producers dropped as base metal prices fell in Shanghai and London, weighed down by fears of further rebounds in the dollar and global economic uncertainty.
Sterlite Industries , Hindalco and Tata Steel slipped between 0.2% and 1.8%.
The MSCI’s measure of Asian markets other than Japan was down 1.3% while Japanese markets were closed for a public holiday.
Capital goods maker Thermax was down 3.3% at 619 rupees after its managing director said the company’s margins won’t improve in fiscal 2012 but it would try to retain them.
Indian Bank was down 1.5% at Rs 229.60 on concerns over equity dilution after its Chairman and Managing Director T.M. Bhasin told reporters the lender will sell 61.4 million shares through a follow-on public offer.