Mumbai: Markets edged down in choppy trade on Friday and looked set to post their biggest quarterly fall in nearly three years, hurt by worries over a spiralling European debt crisis and rising domestic interest rates amid slowing economic growth.
The benchmark is down by about 12% so far in the quarter ended September - its biggest fall since shedding 25% in the October-December quarter of 2008 amid the global financial crisis.
At 11:31am, the 30-share BSE index was down 0.08% at 16,685.7 points, with 19 components declining. It had fallen as much as 1.2% earlier.
Stocks, especially rate-sensitive sectors also came under pressure after the government raised its borrowing target for this financial year, triggering concerns that credit costs could rise for the private sector.
On Thursday, the government said it plans to borrow Rs 2.2 trillion ($44.9 billion) in the second half of the fiscal year that ends in March, significantly more than expected.
Slowing growth in Asia’s third-largest economy and rising interest rates to fight high inflation have put pressure on government finances. New Delhi, which set a target to raise 400 billion rupees from state company share sales in the current fiscal year, is far behind schedule on that target.
“Yesterday’s announcement clearly indicated that government’s disinvestment plans have fallen behind, while its tax collection is below estimates. That has sent a clear signal of slowdown in the general economy,” said Jagannadham Thunuguntla, head of research, SMC Investments and Advisors.
Banking stocks led the fall, with the country’s top lender State Bank of India dropping as much as 2.25% to 1,923.80 rupees, and top private sector lender ICICI Bank losing 1%. The bank index was down about 0.7%.
Shares in Reliance Communications were down 8%, a day after a report the federal police were examining the role of group chairman, Anil Ambani, in a multi-billion dollar telecoms case and that three executives charged in the case had retracted their testimony taking responsibility for decisions made by a unit of the company.
There was “no change in stand by any of the Reliance executives,” Anil Ambani’s Reliance Group said in a statement on Friday, adding that neither the Reliance Communications unit nor the founder group benefited from telecoms licences issued in January 2008.
Export-driven software services edged down after gaining through the week on expectations a weakened rupee would boost realisations for the showcase $76-billion sector.
Top software service exporter Tata Consultancy Services fell 0.7%, while No. 2 Infosys dropped 0.02%. BSE IT index was down 0.1% after gaining 7% over the week.
The rupee has dropped about 8.8% against the dollar in the September quarter.
Shares in engineering and construction firm Larsen and Toubro bucked the trend and gained as much as 2.1% after Citi has upgraded the stock to “buy” from “hold,” citing a sales growth estimate of 20%.
Shares in GVK Power rose as much as 1.9% after the company said its unit had won a bid to develop a four-lane section of Mumbai-Agra national highway in the central Indian state of Madhya Pradesh.
The 50-share NSE index was down 0.56% at 4,987.3. There were 1.5 gainers for every loser in the broader section, with 233 million shares changing hands.
World stock markets will recover next year from a nightmarish 2011 that has wiped trillions of dollars off share prices, according to a Reuters poll that showed almost all major stock indexes ending 2011 in the red.
In Asia, stocks in Japan , Australia and Korea were steady to slightly lower with only Hong Kong shares among the major losers, dropping about 2.12%, as investors locked in profits.
The MSCI’s broadest index of Asia Pacific shares outside Japan was down 1.01%.
Shares in Pantaloon Retail India rose as much as 4.2% after it said late on Thursday its board would meet on Oct. 3 to consider fund raising via various means.
Consumer products maker Marico Ltd reversed losses and gained as much nearly 1% after Reuters report said citing company source that it expects a 10-11% jump in profit in the current fiscal year ending March 2012 on a sales growth of 23%.
Drugmaker Strides Arcolab rose as much as 2.5% after its unit received the US Food and Drug Administration’s approval for an injection version of its cancer treatment paclitaxel.