Markets trade choppy on profit-booking

Markets trade choppy on profit-booking

Mumbai: Indian shares seesawed on Tuesday as investors locked in profits after a five-day rally, with weak global markets clouding the outlook. Financials, energy major Reliance Industries and carmaker Maruti fell.

By 11:05am, the 30-share BSE index, or Sensex, was trading up 0.04% at 17,752.70, with 18 of its components gaining, after initially falling 0.3%. The 50-share NSE index was barely changed at 5,322.40.

The bank sector index shed 0.4% after rising 5.9% over five sessions.

The coming expiry of monthly derivatives contracts on the National Stock Exchange on Thursday and shaky world markets were weighing on the market, R.K. Gupta, managing director of Taurus Mutual Fund, said.

Maruti Suzuki extended losses and fell 3.5 percent as the top carmaker missed forecasts for fourth-quarter net profit and warned of margin pressure and slower sales growth this year in the fiercely competitive compact car market.

“We expect the competitive intensity to rise from here on, given that the new launches by the competition have received an encouraging initial response," JPMorgan analysts said in a note. “We reiterate our cautious stance on Maruti."

Taurus’s Gupta said investors should use price dips to accumulate as robust economic growth, strong foreign portfolio investment and the forecast of normal monsoon rains would eventually drive stocks higher.

“I would say it is a good opportunity to buy," said Gupta, who expects the Sensex to touch 20,000 by the end of June.

The benchmark has gained 1.6% so far this year with foreign investors pumping in $6.1 billion, adding to an 81 percent jump in 2009 on the back of a record $17.5 billion portfolio inflow.

State-run Oil and Natural Gas Corp was up nearly 2% after the Business Standard newspaper reported India plans to more than double the price of gas produced by the oil and gas explorer to $4.2 per million British thermal units.

ICICI Bank, the country’s second-largest lender, eased 0.4% after its quarterly earnings on Saturday failed to match street expectations.

HDFC Bank, which hit a record high Monday, shed 0.5 percent.

Reliance Industries, which has the highest weight on the Sensex, fell 0.9 percent to Rs1,060.50, extending losses after its quarterly profit rise of 30 percent lagged forecasts.

“Slower upstream growth and weak downstream margins will lower returns which could erode RIL’s valuation premium," Sanford C. Bernstein analysts said in a note.

“Moreover non-value adding acquisitions as highlighted by the Atlas deal remain a concern to us," they wrote, downgrading the stock to marketperform from outperform.

Non-ferrous metals producer Sterlite Industries shed 0.9% as base metal prices declined in London.

In the broader market, gainers led losers in a ratio of 1.3:1 on volume of 151 million shares.