Shares fall 1.1% on Goldman, rate worries

Shares fall 1.1% on Goldman, rate worries

Mumbai: Indian shares fell 1.1% on Monday, led by heavyweight Reliance Industries as fraud charges against Goldman Sachs and expectations of a rate hike when Reserve Bank of India (RBI) announces policy on Tuesday weighed down investor sentiment.

Energy major Reliance, which has the heaviest weightage in the benchmark index, ended down nearly 2% at Rs1,061.95, its lowest close in more than a month, amid waning risk appetite among institutional investors.

Shares in Tata Consultancy Services declined 0.4% to Rs811.85, reversing gains of as much as 1.2% earlier, on concerns about the impact of a stronger rupee and rising wages on its earnings in the coming quarters.

Tata Consultancy is expected to report a 38% rise in the January-March net profit after market hours.

The 30-share BSE index ended down 1.08%, or 190.50 points, at 17,400.68 points, after sliding as much as 1.8% during the day to its lowest level in more than a month. Twenty-four of its components closed in the negative zone.

Some analysts said the market’s fall was due to profit taking after the benchmark touched its highest level in more than two years earlier this month.

“Goldman Sachs gave the markets a good excuse to correct themselves," said Gajendra Nagpal, chief executive of Unicon Financial in New Delhi. “The sell-off should continue for a few more sessions, but I don’t see a sharp downside from here."

The benchmark is down 0.4% this year, after surging 81% in 2009. It had climbed above 18,000 points for the first time since 27 February 2008, on 7 April.

Goldman was charged last Friday with fraud by the US Securities and Exchange Commission over its marketing of a subprime mortgage product, rattling stock markets across the globe.

“All the markets globally are reacting to the charges against Goldman," said Neeraj Dewan, director of Quantum Securities in New Delhi. “It’s more of a sentimental issue, which will have an impact on the market in the short term."

In financials, the top lender State Bank of India dropped 0.7% to Rs2,031.75 and HDFC Bank ended down 1.1% at Rs1,935.25 ahead of Tuesday’s annual policy announcement by the central bank.

A Reuters survey last week showed most economists expected the Reserve Bank of India to increase its key short-term borrowing and lending rates by at least 25 basis points.

Automakers such as Maruti Suzuki shed 1.5% to Rs1,331.25 and Hero Honda fell 1.2% to Rs1,896.90 on fears a rate hike would dampen demand. India’s largest bike maker Hero Honda, which announced its quarterly earnings in the after market hours, reported a 49% rise in net profit in the January-March quarter, beating forecasts on higher sales.

In the broader market, losers were ahead of gainers in a ratio of 2:1 on volume of 340 million shares.

The broader 50-share NSE index closed down 1.1% at 5,203.65 points.