Mumbai: Indian shares extended losses to more than 1% on Tuesday afternoon, led by a decline in bank stocks, as most Asian markets came off highs and European markets edged lower.
At 2:36pm, the 30-share BSE index was down 1.09% at 16,178 points, with only four components advancing. The 50-share NSE index was down 1.4% at 4,833.20.
Indian shares were trading higher on Tuesday, with metals leading the rally, after strong U.S. manufacturing data bolstered hopes the global economic recovery was on a firm footing, pushing world stocks higher.
However, they came off early highs as Asian shares erased some of their early gains.
Metals makers Sterlite Industries and Hindalco rose a respective 3.1% and 3.3%, as base metal prices firmed on robust US manufacturing data.
The US manufacturing sector grew in January at a faster rate than expected, with the index reading at its highest since August 2004.
By 10:41am, the 30-share BSE Index was trading up 0.25% at 16,396.22, with half of its components gaining.
“The investor sentiment is driven by positive newsflow. The strong data from the US is pushing our market up,” said Daljeet Kohli, head of research for private client group at Emkay Global. “After the recent decline, a bounce back was waiting to happen, and the data from US triggered it,” he added.
The benchmark which had gained 81% in 2009, is down more than 6% so far in 2010.
Export-focussed software companies gained after strong US data raised expectations of improved order flow from one of their biggest markets.
Infosys Technologies rose 1%, while Tata Consultancy and Wipro climbed 1.6% and 0.7% respectively.
Automobile shares rose as the market cheered their robust January sales numbers.
“Despite possible hiccups in the form of higher interest rates/excise duties, we expect demand to remain strong in FY11,” Edelweiss Securities said in a note on Monday.
India’s top vehicles maker Tata Motors rose 1.3% after it said its January sales jumped 77%.
Mahindra and Mahindra and Maruti Suzuki were both up 0.2%.
The country’s top power producer NTPC bucked the trend and declined 1.6% to Rs207.95.
NTPC has set a floor price of Rs201 a share for its follow-on public offer, indicating the sale will raise at least 82.87 billion rupees ($1.8 billion), an advertisement in the Economic Times newspaper showed.
In the broader market, gainers were nearly three times the number of losers in a volume of 132 million shares. The 50-share NSE index was up 0.1% at 4,903.15.