Noon: Markets down on stimulus exit concerns

Noon: Markets down on stimulus exit concerns

Bangalore: Indian shares fell 0.2% in a choppy trade on Friday, trailing losses in global markets on fears authorities around the world might start withdrawing some of the stimulus measures taken to shore up crisis-hit economies.

Outsourcer Infosys Technologies dropped as much as 1.8% to Rs2,245, after signs of weakness in the US housing market signalled a less vigorous pace of economic recovery in its key market.

No. 2 Lender ICICI Bank fell 1.2% to Rs849.45. 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 market is showing clear signs of tiredness and the last few weeks’ exuberance is now giving way to caution," said K.K. Mital, head of portfolio management services at Globe Capital in New Delhi.

The Indian market hit a 16-month high of 16,943.49 on Tuesday, at which point it was up more than 75% in 2009.

“There is still lot of money waiting on the sidelines of the market, but people want a correction to take place first," he said. “A clear pattern for the market will only emerge next month as the earning results start coming out."

At 12:07pm, the 30-share BSE index was down 0.24% at 16,740.67 points, with 16 components in the red. The broader 50-share NSE index was down 0.23% at 4,975.

The benchmark had fallen as much as 0.97% in the opening deals, and had briefly turned positive in morning deals.

The index is still up 7% so far this month.

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.

Stocks elsewhere in Asia fell and the US dollar extended gains on Friday on fears liquidity could get tighter on signs central banks were readying to start winding down extraordinary stimulus measures.

Major world central banks announced on Thursday that they planned to scale back massive injections of US dollars into their banking systems as financial markets stabilise after a devastating crisis.

“India is not decoupled from the global markets and therefore withdrawal of the stimulus packages will have some impact on the domestic markets, but it may not be a very big impact," Mital said.

Shares in top outsourcer Tata Consultancy Services were down 1.7% at Rs589.50 after its top executives told Reuters it would take another few months to tell whether business spending was recovering.

The trend was positive in the broader market with 1,779 gainers leading 780 losers on a high volume of 293 million shares.