Markets end 0.5% down on cautious sentiment

Markets end 0.5% down on cautious sentiment

Bangalore: Indian shares lost 0.53% on Friday, finding little comfort in a pledge by the Group of 20 to keep emergency economic stimulus in place, to end down in a week when they had hit 16-month highs.

Analysts said the market was also weighed down by cautious investors paring their positions ahead of a holiday-shortened week, with markets shut for holidays on Monday and Friday.

Shares in leading mobile firm Bharti Airtel shed 1.2% to Rs414.35 on uncertainty over its planned $24 billion tie-up with South Africa’s MTN Group.

The deadline for exclusive talks between the two to create the world’s third-largest mobile phone group by subscribers is Wednesday, although it has previously been extended twice.

No. 2 Lender ICICI Bank fell 2.5% to Rs838.60. Citigroup said it believed Indian banks’ profitability and stock performance would be under significant pressure in the near term as there was pressure on interest rates to rise.

The 30-share BSE index ended down 0.53% or 88.43 points, at 16,693, with 20 components falling. The index fell 0.3% on the week, but had hit a 16-month high on Tuesday, at which point it was up more than 75% in 2009. The broader 50-share NSE index ended down 0.55% at 4,958.95.

“A small correction is always healthy for the market and I do think this phase will continue for some time as fresh money is not coming in," said Daljit Kohli, head of research at Emkay Global Financial. Analysts said the market would regain its momentum next month if corporates unveiled robust numbers and a positive outlook. The quarterly earnings season kicks off with IT bellwether Infosys Technologies reporting on 9 October.

“There is still lot of money waiting on the sidelines of the market, but people want a correction to take place first," said K.K. Mital, head of portfolio management services at Globe Capital in New Delhi.

“A clear pattern for the market will only emerge next month as the earning results start coming out."

Brokerage Religare said in a report the market would remain under pressure if it could not build a base above 16,890, and advised investors to book profits.

Heading into the second day of a summit aimed at ensuring the world economy emerges from its worst recession in generations, the Group of 20 vowed to keep emergency economic support in place until a recovery is secured, a draft communique said on Friday.

The market had opened weaker on concerns that central banks around the globe were ready to start withdrawing some of the extraordinary stimulus, which could hit foreign investment flows in Indian stocks.

Foreigners have been net buyers of nearly $11 billion of stock so far this year.

Outsourcing firms fell after US housing data signalled a less vigorous pace of economic recovery than previously anticipated in their key market, and after top executives of sector leader Tata Consultancy Services told Reuters it would take another few months to tell whether business spending was recovering.

Infosys fell 1.7% to Rs2,245.30, its lowest close in more than two weeks, and Tata Consultancy Services closed down 2.1% at Rs587.05.

The trend was positive in the broader market with 1,647 gainers leading 1,166 losers on a high volume of 594 million shares.