Mumbai: Indian shares closed barely changed for the week but dropped 0.9% on Friday, in tandem with world markets on worries about global economic recovery and expectations of tighter financial regulation ahead of a summit of Group of 20 nations.
However, losses were capped as investors cheered a new gas supply agreement between the recently reconciled Ambani brothers and as the government approved market-determined petrol prices.
The 30-share BSE Index declined for the second session as it closed down 0.88%, or 155.71 points, to finish at 17,574.53.
Twenty-two of its components lost ground.
Mukesh Ambani-led Reliance Industries rose 1.1% to Rs1,063.25, after the company said it had signed a revised gas supply agreement with Reliance Natural Resources (RNRL) controlled by younger brother Anil.
“People expected a new agreement after the reconciliation. The new agreement and the patch-up are positive for stocks of companies of both brothers,” said Rakesh Rawal, who manages $1 billion as head of private wealth management at Anand Rathi Financial Services.
Reliance Natural Resources was the most traded main stock on the Bombay Stock Exchange. About 26.9 million shares changed hands, more than double their average volume for 30 days.
RNRL closed 3.3% higher at Rs65.95.
State-run oil companies jumped after the government freed up state-subsidised petrol prices and hiked other fuels as high global oil prices and pressure to trim the budget deficit outweighed concerns about the political impact of the measures.
Oil explorer Oil & Natural Gas Corp soared 6.4% to Rs1,264. It rose to as much as Rs1,290.90, its highest level since January 2008.
Bharat Petroleum Corp, Hindustan Petroleum Corp and Indian Oil Corp jumped between 10.4% and 13.7%.
Differences among G-20 leaders ahead of a summit in Toronto over how to secure the economic recovery caused investor concern, particularly with leading indicators reflecting a slowdown ahead.
“There are no signs that the scene globally is going to turn positive anytime soon. It really depends on how the developments shape up in Europe and other geographies,” Anand Rathi Financial’s Rawal said.
So far this month, foreign funds have been net buyers of around $1.7 billion of Indian stocks, fuelling a rally of 3.7% in the benchmark.
In May, foreigners had pulled out $2 billion, as fiscal troubles in Europe rattled investors across the globe.
Meanwhile, junior farm minister K.V. Thomas said India’s June-September monsoon rainfall is likely to be 102% of long-term average, despite a week-long slow progress.
However, market participants were upbeat about the outlook for the rest of the year because of a pick-up in economic growth.
The BSE index should rise to 19,000 points by the end of 2010, the median estimate in a Reuters poll of 20 market participants showed, while 17 forecast it rising to 21,000 by the end of June 2011.
Financials led the losses, with leading lender State Bank of India declined 2.4%, while rivals ICICI Bank and HDFC Bank shed 3.1 and 2.7%, respectively.
Financials were also weighed down after data on Thursday showed food inflation in Asia’s third-largest economy accelerated in mid-June, maintaining pressure on the central bank to tighten monetary policy at a faster pace.
Auto makers slid on fears auto sales may be impacted by a rise in fuel prices.
Tata Motors and Mahindra and Mahindra dropped nearly 2% and 2.8%, respectively. Hero Honda declined 0.3%.
In the broader market, declining shares outnumbered gainers in the ratio of 1.5:1 on a relatively high volume of 438 million shares.
The 50-share NSE index shed nearly 1% at 5,269.05.
Elsewhere, Europe’s FTSEurofirst 300 was down 0.5% by 1031 GMT while MSCI’s measure of Asian shares other than Japan declined 1.9%.