Mumbai: Indian shares fell more than a percent on Wednesday tracking weak global markets, with banks declining as investors took profits after a steep rally this year. Banks led the fall with the sector index, which has risen 89% so far this year, shedding 2% in the day.
“Banks have moved up a lot recently, So, people are just booking profits before the monetary policy,” said Neeraj Dewan director of Quantum Securities. “Adding to the woes, global cues turned negative today,” he added.
Top lender State Bank of India declined 3.2% to Rs2,385.30. The stock has risen more than 85% so far in 2009.
Private lender ICICI Bank, which has more than doubled since the start of 2009, closed 1.6% lower at Rs928.95.
The 30-share BSE Index closed 1.24% or 213.84 points lower at 17,009.17, registering its second consecutive fall in the week. Only a fifth of its components closed in the green. The 50-share NSE index closed down 0.99% at 5,063.60.
Foreign fund inflows of about $14 billion have powered a rally of more than 76% in the benchmark so far in 2009. The index has more than doubled from its 2009 lows seen in early March.
“Valuations are not cheap right now. I think the market may not correct big time, but will be rangebound until the year end,” said Dewan.
This year, the Sensex has so far outperformed the MSCI all-country world stock index, which has risen more than 30%, and even the benchmark MSCI Emerging Markets Index, which gained over 69 percent.
Reliance Industries, which has the highest weight on the Sensex, closed little changed after rising as much as 1.15% in early deals.
The country’s Supreme Court which began a hearing in the gas supply dispute between the energy and petrochemical major with Reliance Natural Resources on Tuesday, continued to hear the case in the day.
Billionaire Mukesh Ambani-led Reliance Industries and Reliance Natural, controlled by younger brother Anil Ambani, are caught up in a legal tussle over terms of a deal to sell natural gas to Reliance Natural at a rate below the price set by the government.
Software services firms, were in demand on increased optimism over the growth outlook for the sector.
“With significant pent-up demand, we expect 2010 IT budgets to be strong,” Citigroup Global Markets analysts Surendra Goyal and Vishal Agarwal said in a note.
“We believe that consensus estimates will continue to inch up over the next 6-9 months and recommend investors to participate in the recovery through TCS/Wipro,” Citigroup Global Markets said.
Top software services firm Tata Consultancy Services firmed 1.9%, while rival Wipro climbed 0.4%. Infosys Technologies bucked the trend and closed down 0.9% at Rs2,165.45.
Top mobile operator Bharti Airtel climbed 1.2% to Rs332.60.
“Short-term negatives are priced in at current levels (of telecom stocks). I would recommend a buy on telecom stocks with a long term horizon,” Dewan said pointing that Bharti would be the best pick in the sector.
The world’s eighth-largest steel maker Tata Steel dropped 4% to Rs552.45, after it rose over 8% so far in October.
In the broader market, losers outnumbered gainers in the ratio of 1.3:1, in relatively moderate volumes of 440 million shares.