Markets rise 0.3%; SKS, RCom slide3 min read . Updated: 18 Nov 2010, 03:54 PM IST
Markets rise 0.3%; SKS, RCom slide
Markets rise 0.3%; SKS, RCom slide
Bangalore: Indian shares eked out modest gains in choppy trade on Thursday, but financial stocks led by SKS Microfinance fell on a state crackdown on collection practices by lenders to the poor.
Shares in mobile operator Reliance Communications and developer Unitech dropped sharply roiled by uncertainty stemming from a possible probe into 2G spectrum allocation, that a government audit says was awarded too cheaply.
Bharti Airtel climbed 3.8% to Rs324.90 after the top mobile operator said it was on track to roll out 3G wireless services by the end of this year and its chairman was optimistic about the high-margin offering.
The 30-share BSE index ended up 0.33%, or 65.5 points, at 19,930.64, with 19 of its components advancing. The 50-share NSE index ended up 0.2% at 5,998.8 points.
The benchmark, which had dropped 2.2% in the previous session, seesawed through the day falling as much as 1.3% at one stage.
SKS tumbled 20% after the country’s leading lender to tiny businesses warned a collections ordinance enacted last month in Andhra Pradesh state, the heart of India’s microfinance sector, could hurt profits.
Leading lenders State Bank of India and ICICI Bank shed 0.6% and 3.1% respectively on worries about their exposure to the microfinance sector, which has come under increased scrutiny.
“There are concerns that the NPAs of the banks may go up in the near future on growing troubles in the microfinance sector," said K.K. Mital, head of portfolio management services at Globe Capital in New Delhi, referring to non-performing assets or bad loans.
Axis Bank closed down 2.7% at Rs1,426.9, erasing gains of 2.8% in the opening deals, with some traders saying its $456 million deal to buy investment banking and broking units of Enam Securities was expensive.
Shares in Reliance Communications and developer Unitech fell as much as 10% after the mobile phone industry was beset by a fresh wave of regulatory uncertainty stemming from a possible probe into 2G spectrum that a government audit says was awarded too cheaply.
The scandal prompted the resignation of telecom minister Andimuthu Raja and will see the country’s prime minister replying to the Supreme Court’s criticism over his failure to probe the scandal.
Reliance Communications and Unitech, which has a telecoms joint venture with Norway’s Telenor, have said they had complied with the rules.
Reliance ended down 4.9% at Rs153.90 while Unitech lost 4.2% to close at Rs71.20.
Traders said the BSE index, among the best performers in emerging markets this year, was likely to stabilise after a bout of profit-taking.
“The market is giving an early signal that the correction could be partly over. We will have to see if this holds next week for a validation," said Deven Choksey, managing director and chief executive of KR Choksey Shares.
“We will see a gradual increase of inflows once the global situation starts stabilising."
Foreign funds have invested a record $28.5 billion in Indian equities so far in 2010, helping the benchmark index rise 14.1% over the same period.
In the broader market, losers led gainers in a ratio of 1.8:1 on moderate volume of 448.9 million shares.
Elsewhere, the pan-European FTSEurofirst 300 was up over 1% at 3:54pm, while the MSCI’s measure of Asian markets other than Japan added 1.4%.
Financial services firms JM Financial and Edelweiss rode up on hopes of consolidation in the sector after the Axis-Enam deal. JM closed up 1.5% at Rs36.75, while Edelweiss rose 1.9% to Rs59.45.
Hero Honda Motors, 26% owned by Japan’s Honda Motor, added 5.5% to Rs1,912.85 after brokerage Credit Suisse upgraded the leading Indian motorcycle maker to “outperform" from “neutral".