Mumbai: Indian shares fell 0.3% in choppy trade on Friday as jitters that poor rains will hit economic recovery and downbeat US data soured sentiment, a day after the market rose 3.3% to its best close in more than a week.
Outsourcer Infosys Technologies, which gets most of its revenue from the United States, fell 1.5% to Rs2,035.10 after fresh data on Thursday dented hopes the US economy is on the verge of a strong rebound.
US retail sales for July were much weaker than forecast, while weekly jobless claims rose more than expected.
Top Indian mortgage lender Housing Development Finance Corp, private-sector lender ICICI Bank and diversified cigarette maker ITC were the other major losers.
But energy giant Reliance Industries rose 0.2% to Rs2,027, and Reliance Infrastructure gained 2.1% to Rs1,192.10.
“Right now there is a tug-of-war happening between the positives and the negatives of the market,” Ajay Parmar, head of institutional equities at Emkay Global Financial Services, said.
“The market seems to be moving into a phase of randomness where it is up one day and down the next,” he said. “But on the concerns side, there are a lot of them.”
By 11:48am, the 30-share BSE index was down 0.3% at 15,480.33 points, with 18 stocks declining, after opening up 0.1%. The 50-share NSE index was down 0.2% at 4,595.90.
The benchmark posted its best one-day percentage gain in more than three weeks on Thursday as a proposal to overhaul the country’s tax system and a global equities rally on upbeat comments from the US Federal Reserve buoyed sentiment.
Analysts warned just bullish sentiment may not be able to spur the market significantly higher, as worries that poor monsoon rains would dent economic growth and concerns about rich valuations still persist.
The monsoon rains were 56% below normal over the past week, government data showed on Thursday, disappointing farmers for a third consecutive week while consumers felt the pinch of rapidly rising food prices.
With just over 40% of agricultural land irrigated, farm output is heavily reliant on rains and the shortfall could potentially hurt rural demand, which accounts for more than half of India’s domestic consumption.
India’s wholesale price index fell in the year to 1 August for the ninth week in a row, but there were signs prices could rise faster in the coming months due to the weak monsoon and growing manufacturing demand.
The BSE index had slid 3.25% last week on rain concerns after jumping 16% over the previous three weeks, buoyed by a worldwide equities rally on strong corporate earnings and improving signs of a global economic recovery.
Despite concerns about rich valuations after the benchmark leapt 93% from a 2009 low in early March and 61% this year, a rush of liquidity pouring into equity markets could support stocks in the short term as investors look to buy on dips, traders said.
However, ICICI Bank fell 1% to Rs749.25, while Housing Development Finance Corp eased 1.9% to Rs2,318.10, ITC dropped 1.9% to Rs234.50.
In the broader market, gainers led losers 1,357 to 924 on relatively heavy volume of 172.3 million shares.
Asian shares were mixed on Friday, with Japan’s Nikkei up 0.8%, while MSCI’s measure of other Asian markets was flat.