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Markets shed 0.5%; financials drop

Markets shed 0.5%; financials drop
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First Published: Wed, Jul 07 2010. 06 17 PM IST
Updated: Wed, Jul 07 2010. 06 17 PM IST
Mumbai: Indian shares were trading down 0.5% on Wednesday as concerns global growth was faltering hit Asian markets, with financials among the major losers as rising interest rates are set to tighten profit margins.
“Global cues are worrying and that is why we are trading in the red today,” said Kunal Sukhani, manager of institutional equities at Asian Markets Securities.
The US service sector expanded in June for a sixth straight month but growth was at the slowest pace since February, the latest evidence that the economic recovery is cooling.
By 11:09am, the 30-share BSE index was trading down 0.45% at 17,534.36, with 22 of its components declining. The 50-share NSE index was down 0.5% at 5,261.05.
Powered by 4.5% rebound in June, the benchmark is up just 0.2% in the year to date, but there could be pleasant surprises as corporate earnings rise on the back of a robustly expanding economy.
“Just like the ongoing football World Cup, Indian equities could throw up a few surprises in the second half of the year,” brokerage Motilal Oswal said earlier this month, noting the market had been lacklustre in the first half.
The June-September annual monsoon, which is crucial for India’s economy, has picked up after a subdued spell and has covered the entire country, brightening the prospects for farm output and rural incomes.
Rainfall was 16% below normal in June, when the monsoon did not advance beyond central India for two weeks, but heavy showers in the past week have narrowed the deficit to 13%.
The government expects the economy to expand 8.5% in in 2010/11 and 9% in the following year from 7.4% in 2009.10.
Motilal Oswal said accelerating economic and corporate profit growth would limit downside in the markets, but above-average valuations would cap the upside.
The banking sector index dropped 0.8% after rising 1.7% in the previous session.
The central bank is expected to hike rates again in its quarterly review on 27 July after a surprise increase last Friday, a Reuters poll showed.
Top lender State Bank of India was down 0.8% while leading private sector rivals ICICI Bank and HDFC Bank dropped 1.4% and 0.9% respectively.
Mortgage lender Housing Development Finance Corp was down 0.9%.
Tata Steel, the world’s eighth-largest steelmaker, shed 0.7% after it said on Tuesday sales from its Indian operations stood at 1.4 million tonnes in April-June, almost flat compared with the same period last year.
Energy giant Reliance Industries, which has the highest weight on the Sensex, declined 0.7% to Rs1,065.25.
In the broader market, gainers outpaced losers in a ratio of 1.4:1 on volume of 133 million shares.
Power Grid Corp of India was up 1.2% at Rs103.30 rupees after its board approved investment of 20.34 billion rupees in three projects.
AstraZeneca Pharma India dropped as much as 4.9% to Rs1,270 after its parent set the buyback price at Rs576.10 a share for the remaining 10% it does not own.
Retailers Pantaloon Retail and Shoppers Stop were up 1.3% and 3.7% respectively after India on Tuesday took a tentative step towards opening up the organised retail sector to foreign companies.
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First Published: Wed, Jul 07 2010. 06 17 PM IST
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