Markets snap 4-day rally, techs decline

Markets snap 4-day rally, techs decline

Mumbai: Indian shares snapped a four-session winning streak and closed 0.7% lower on Tuesday, as export-driven outsourcers fell on worries the firm rupee could squeeze their margins.

The BSE 30-share Sensex closed 0.68%, or 121.18 points, lower at 17,590.17 points, with nineteen of its components closing in the red.

The rupee pared early gains, after having risen to a near 19-month peak of 44.88 earlier on Tuesday. At the day’s high, the rupee was up 3.7% so far in 2010 and traders expect it to stay firm in the near term.

“The rupee is not likely to depreciate anytime in near future. That is getting to be a worry for the technology stocks," said Vaibhav Sanghavi, director of Ambit Capital.

IT bellwether Infosys Technologies dropped 2.6%, while rivals Tata Consultancy Services and Wipro shed 1.3% and 1.9%, respectively.

Investors also booked profits in select stocks, which had seen an upsurge recently, Sanghavi added.

The banking sector index dropped 0.6% after rising 3.7% over the four previous sessions.

Top lender State Bank of India and private lender HDFC Bank declined 0.6% and 3%, respectively. Mortgage lender Housing Development Finance Corp shed 1%.

The main index had scaled 25-month high on Monday.

Neeraj Dewan, director of Quantum Securities, expects the market to consolidate in the near term.

“Earnings are expected to be good, but seems like they are already priced in. Monsoon will be the key factor to watch," said Dewan.

Foreign funds have pumped around $3.9 billion in Indian equities so far this year, most of which arrived in March. The main index is up about 7.1% in the current month.

“The combination of positive domestic cues and the more than benign global conditions will keep the bid for the INR (Indian rupee) alive for a couple of months," HDFC Bank analysts said in a note.

“Both equity and debt flows are likely to ride on easy liquidity and exert appreciation pressure on the INR," they added.

Energy giant Reliance Industries, which has the highest weight on the Sensex, dropped 0.6%.

India’s top mobile operator Bharti Airtel closed barely changed. The company’s $9 billion expansion into Africa faced a potential new hurdle on Monday as the government of Gabon raised a regulatory objection to the deal.

Earlier on Monday a source had said that the deal over Bharti’s purchase of the African assets of Kuwait’s Zain would be signed in Amsterdam on Tuesday.

In the broader market, gainers led losers in a ratio of 1.5:1 volume of 375 million shares, lower than Monday’s volume.

The FTSEurofirst 300 index rose 0.4% by 1059 GMT, while emerging stocks gained 0.5%.

The NSE 50-share index Nifty closed 0.8% lower at 5,262.45 points.