Mumbai: Shares dropped 0.7% on Tuesday, led by losses in outsourcing firm Infosys Technologies , as investors took profits after the main index saw its highest close in nearly three months in the previous session.
Investor sentiment was also dented by weaker Asian markets as rising commodity prices stoked worries about inflationary pressures globally.
Shares in Suzlon Energy dropped as much as 3.6% to 47.85 rupees after the wind turbine maker announced the launch of a $150 million, five-year foreign currency convertible bond issue.
Separately, Suzlon also said it planned to take full ownership of Germany’s REpower Systems AG after raising its stake to more than 95% that allows it to start the process of squeezing out minority shareholders.
The main 30-share Bombay Stock Exchange index was down 0.62% at 19,579.63 points by 12:00pm, after having opened up 0.2%, with all but five of its components in the negative territory.
“High oil price is a factor that will continue to weigh on the global markets sentiment for some time and we have to see its impact on the margins of the Indian companies,” said K. K. Mital, head of portfolio management services at Globe Capital.
US crude oil futures slipped early Tuesday, but still hovered around the Monday’s 2-1/2 year high as geopolitical risks amid fighting in Libya, unrest in Yemen and stalled elections in Nigeria continued to support prices.
Credit Suisse said in a report it was cutting its 2011/12 India’s gross domestic product growth forecast to 7.5% from 7.7% , the fourth global brokerage to do so in nearly a month, and raising its year average WPI inflation projection to 7.6% from 7% on high oil prices.
“Sticky inflation should see the central bank raise rates another couple of times by July, before growth concerns begin to emerge.... The equity market, in particular, still looks vulnerable to us,” it said in a report issued on Monday.
Credit Suisse’s revised growth forecast is the lowest yet, compared with 7.7% estimated by both UBS and Morgan Stanley and 8.2% by Bank of America-Merrill Lynch for this fiscal year that began on 1 April.
India’s wholesale price index rose an annual 8.31% in February on higher fuel and manufactured product prices compared with 8.23% the previous month.
Indian shares rose 1.5% on Monday to their highest close since early January. The index dropped 5.2% in the March quarter, making it the worst performer among major world markets, Thomson Reuters data showed.
Shares in Infosys, the country’s No. 2 software exporter, was down nearly 1% to Rs 3,254.45 as investors booked gains on the stock that had risen as much as 2.4% on Monday to its highest level in two-and-a-half months.
Idea Cellular was trading up 2.7% at 69.25 rupees, having risen as much as 7.5% earlier, after Bloomberg reported the controlling shareholder of the mobile operator was mulling a stake sale and has held talks with potential bidders including MTN Group .
“We are not selling off,” a spokeswoman for Idea’s parent Aditya Birla Group told Reuters.
Shares in Bharat Heavy Electricals Ltd were trading up 1.5% at Rs 2,205.90 extending their gains of nearly 3% in the previous session on strong order growth outlook.
The top power equipment maker said on Monday it expected new order growth to accelerate to 10% and revenue should rise to $10 billion-$11 billion in the fiscal year that started on April 1 from $9.8 billion in the previous year.
In the broader market, gainers outpaced losers in the ratio of 2.2:1 on a moderate volume of about 130 million shares.
The broader 50-share NSE index was down 0.63% at 5,871.40 points.
Tecpro Systems was trading up 7.7% at Rs 310, after the engineering, procurement and construction firm said it had won orders worth 2.56 billion rupees from NTPC for setting up a coal handling plant.
Electrosteel Castings Ltd rose 4.3% to Rs 33.10 after the company said it has entered into a joint venture with Australia-listed Dart Energy for a coal mine de-gassing project.