Markets close down 0.4% on investor resistance

Markets close down 0.4% on investor resistance

Mumbai: Indian shares snapped a three-day winning streak and shed 0.3% on Wednesday as investors took profits after the market had climbed nearly 11% in two weeks.

Energy major Reliance Industries led the losses, falling 1.5% to Rs2,102.45, on disappointment there were no announcements on acquisitions or specific project plans at its annual meeting of shareholders on Tuesday.

The 30-share BSE index dropped 51.87 points to 16,998.78, with 18 components closing in the red. The 50-share NSE index closed down 0.15% at 5,054.70.

“There is resistance coming in as we move towards the level from where we had corrected last month," said Rajen Shah, chief investment officer at Angel Broking.

The index had retreated after hitting nearly 17,500 in October. The benchmark, which fell by more than half last year, is up about 76% in 2009 and has more than doubled from a March low.

Heavy foreign fund investment of $15.3 billion in 2009 have propelled the market higher and traders are optimistic that a weak dollar will encourage more inflows even as valuations looked expensive.

Indian officials have said on recent occasions they welcomed the inflows, but Finance Minister Pranab Mukherjee on Wednesday also noted that India was ready to deal with the flows if they became a problem.

“It is not a matter of concern as we have the system of monitoring," he told reporters. “And whenever we will find that there are some distortion, then we will have the arrangement to counteract it," he said on the sidelines of an event.

“Therefore, it would not be disturbing," Mukherjee added.

Outsourcers, which get most of their revenue from exports, were in demand on the back of a pick up in hiring plans as their business environment improves.

Traders said better demand from banking, financial services and insurance companies were helping outsourcers.

Infosys and Wipro climbed 1.5% and 0.5% respectively, but sector leader Tata Consultancy erased early gains and slipped 0.5%.

Banks faltered after an early rise as investors locked in profits after a big rally this month. Top lender State Bank of India shed 0.9% to Rs2,330.60, but is still up more than 6% in November.

Rival ICICI Bank fell 1.5% to Rs905.25 after rallying more than 14% this month.

Engineering and construction firm Larsen & Toubro dropped 1.7%, but is up 7% in two weeks.

In the broader market, gainers led losers in the ratio of 1.4:1 on relatively moderate volume of 404 million shares.