Mumbai: Indian shares fell 2.45% on Thursday, with automakers such as Mahindra & Mahindra, Tata Motors and Maruti Suzuki leading the drop in the last hour of trade.
Large institutional investors booked profits in the auto sector after it jumped 33.5% over the past 3-weeks, outperforming a near 19% rally in the main index during the period, traders said.
A decline on Wall Street overnight as downbeat US data cast a shadow over recent economic optimism also weighed on investor confidence, analysts said.
“The momentum is being lost and investors are nervous,” V K Sharma, head of research at Anagram Stock Broking, said.
“There is no reason to be confident about the market making more gains now.”
Leading vehicle maker Tata Motors dropped 6.9% to Rs418.30, while top utility vehicle maker Mahindra & Mahindra ended down 4.1% at Rs881.90.
No. 1 car maker Maruti Suzuki shed 5.3% to Rs1,364. The auto sector index slid 4.4%.
Energy giant Reliance Industries fell 1.4% to Rs2,046.55 and Oil and Natural Gas Corp lost 3.3% to Rs1,152.80 as oil hovered close to $71.5, paring gains of nearly 1% in the previous session.
Other major losers included diversified cigarette maker ITC, which slid 4% to Rs233.80, and No. 2 outsourcer Infosys Technologies that eased 1.9% to Rs2,054.60.
“Overall trading interest in large-cap companies is low today,” Hemant Thukral, vice president at Asian Markets Securities, said. “The market is in consolidation mode.”
The 30-share BSE index ended down 389.80 points at 15,514.03. In the broader market, losers led gainers 1,623 to 1,083 on heavy volume of 567.4 million shares. The 50-share NSE index fell 2.3% to 4,585.50.
The rally over the previous three weeks was driven by strong domestic and global corporate earnings. Cars and utility vehicle sales grew about a third in July, their best performance in a year, thanks to new launches and easier availability of finance, raising hopes for a strong pick up in the coming months.
But worries that stocks are pricey have emerged as the main index has leapt 93% from a 2009 low in March and 61% this year.
This year, only China’s, Russia’s and Indonesia’s benchmarks have outperformed the BSE index, which trades at 17.9 times one-year forward earnings.
In contrast, benchmarks in other emerging markets such as Brazil, Indonesia and South Korea trade at a multiple of about 13-14, while Russia trades at 8 times.
Asian shares were higher on Thursday, with Japan’s Nikkei rising 1.3%, while MSCI’s measure of other Asian markets was up 0.8%.