Mumbai: Shares fell for a fourth consecutive session on Friday and posted their biggest weekly drop in almost three months, weighed down by weak global markets and mixed quarterly earnings.
Financials were among the losers as investors braced for the Reserve Bank of India’s monetary policy review next week that is expected to raise banks’ reserve requirements and curtail money available for loans to tame inflation pressures.
The BSE 30-share index Sensex fell 1.1%, taking losses for the week to 4% - its biggest weekly drop since 5.4% slide in the last week of October last year.
Reliance Industries, which has the heaviest weight in the index, ended little changed after the energy major posted its first quarterly profit increase in five quarters, indicating a ramp up in output from its gas fields is paying off.
World equities fell on Friday with many financial shares as well as the dollar pressured by US President Barack Obama proposed sweeping restrictions on banks.
“Global cues, bad results from L&T were hurting our market,” said Rakesh Rawal, head of private wealth management at Anand Rathi Financial Services.
Larsen & Toubro, India’s largest engineering and construction company, fell sharply after it posted a drop in quarterly sales and cut full-year revenue guidance citing project delays.
The stock dropped 3.4% to Rs1,472.35, its lowest close in five months.
“High asking rate for execution/order flows continue to make us apprehensive of stock outperformance, and we maintain Neutral,” JPMorgan said in a client note on the company.
Top lender State Bank of India shed 1.6%, while rivals ICICI Bank and HDFC Bank dropped 1.5% and 1.9% respectively.
“The basic events to watch for in the near term are the RBI policy this month end and the budget next month,” Rawal said.
The Reserve Bank of India (RBI) reviews key interest rates in its quarterly policy meeting on 29 January.
A Reuters poll found 24 out of 25 economists expected the central bank to raise the cash reserve ratio (CRR), the proportion of deposits banks need to keep with the central bank, by up to 50 basis points in the meeting.
The Sensex dropped 1.12%, or 191.46 points, to 16,859.68, its lowest close in a month. Only four of its components advanced.
Top mobile operator Bharti Airtel eased 0.3% to 321.30 rupees, after rising as much as 2.4% in early trade as its net profit rose 2% to Rs2,210 crore under US accounting rules in its fiscal third quarter ended December.
In the broader market, decliners led gainers in the ratio of 2.4:1 on volume of 532 million shares, lower than last week’s daily average of 651 million shares.
The NSE 50-share index Nifty closed 1.1% lower at 5,036.