Markets flip-flop; techs up, HDFC Bank down

Markets flip-flop; techs up, HDFC Bank down

Mumbai: Indian shares seesawed on Wednesday after a surprise rate rise in China spooked Asian peers and a $3.5 billion IPO by Coal India continued to drain investor funds.

Still, the confidence remained upbeat with foreign funds putting their faith in India’s fast-expanding economy and expectations for strong corporate earnings.

Outsourcers such as Tata Consultancy Services and Infosys Technologies, which get most of their revenue from exports crept higher after a bout of profit-taking the previous day.

At 10:05am, the 30-share BSE index was up 0.23% at 20,028.82 points, with 21 of its components advancing. It fell as much as 0.5% early.

“China’s move led to a selloff worldwide, which impacted the sentiment here," said Neeraj Dewan, director of Quantum Securities.

“Also, the Coal India IPO is draining away some liquidity."

The Chinese central bank’s surprise rate increase was on Tuesday was the first in nearly three years and reflected concern about resurgent asset prices. It could mark the start of a more aggressive phase of monetary tightening in the world’s fastest-growing major economy.

India’s central bank is widely expected to raise rates for the sixth time since mid-March when it reviews policy on 2 November to rein in stubbornly high inflation.

Foreign funds have invested a record $23.5 billion in Indian equities so far in 2010, including in initial share offerings. The inflow has helped the BSE index climb 14.6% in the year to date.

Coal India’s initial public offering was oversubscribed on Tuesday, the second day of a four-day offering, driven by strong investor demand and lower-than-expected pricing for the country’s largest-ever IPO.

The IT sector index was up 0.6%, after declining 2.2% on Tuesday. Tata Consultancy and Infosys gained 0.7% each, while Wipro rose 0.5%.

HDFC Bank dropped 0.7% after the private-sector lender met street estimates with a 33-percent rise in quarterly net profit.

“The result was good. But it is already in the price," said Dewan, pointing to the stock’s 38% gain so far in 2010.

Metal producers declined as base metals prices fell in London and Shanghai after a sell-off in the international market in the previous session following China’s first interest rate rise since 2007.

Non-ferrous metals producer Sterlite Industries and aluminium maker Hindalco dropped 2.7% and 0.2% respectively. Tata Steel, the world’s seventh-largest steelmaker, was down nearly 1%.

In the broader market, gainers outpaced losers in a ratio of 1.7:1 on volume of 84 million shares.

The 50-share NSE index was barely changed at 6,029.70.

Elsewhere, the MSCI’s measure of Asian markets other than Japan was down 0.1%, while Japan’s Nikkei fell 1.8%.


Property developer Oberoi Realty Ltd listed at Rs280 on the BSE, a premium of 7.7% to its issue price of 260, and extended gains to Rs292.40.

HCL Technologies fell 1.4% to 433 rupees after the software firm said its September-quarter profit fell by a little more than a third from a year ago, as hiring expenses jumped sharply.

Bajaj Holdings and Investment, the parent of India’s No. 2 motorcycle maker Bajaj Auto, rose 2.7% to Rs873.85, after it said late on Tuesday its July-September net profit nearly doubled.