Shares drop 1%; banks, techs drop

Shares drop 1%; banks, techs drop

Mumbai: Shares fell more than 1% on Tuesday, extending a drop into a second day, on worries euro zone debt problems could hit European banks and take a toll on the financial sector across regions.

Slowing domestic growth and a gloomy outlook for the US economy added to the depressed sentiment, traders said.

Lenders such as ICICI Bank, State Bank of India and HDFC Bank were among the major losers.

Export-focused software services companies Infosys and Tata Consultancy Services that depend on the US market for a major share of their revenue fell on concern a possible US recession could dent new orders.

Oil and Natural Gas Corp bucked the trend and rose 1.5% after sources told Reuters late on Monday, the state-run explorer’s $2.5 billion follow-on share sale was likely to be launched on 20 September.

By 10:51 am, the main 30-share BSE index was down 1.02% at 16,542.17 points, with 22 of its components in the red.

“The sentiment is very cautious, no one wants to really invest at this point in time," said Ambareesh Baliga, chief operating officer at investment consultants Way2Wealth.

State Bank, the country’s largest lender, fell 3.15%, while rivals ICICI shed 2.6% and HDFC Bank dropped 1.6%.

Tata Consultancy Services was trading down 1.9% and Infosys slid 1.3%.

Real estate firms DLF, Housing Development & Infrastructure, Peninsula Land, Sobha Developers were down between 1-5% after the cabinet approved on Monday a bill to reform land acquisition, which could push up costs.

DLF’s fall was exacerbated as Morgan Stanley cut its target price on the stock due to shrinking profits and high debt.

The BSE index is one of the worst performers in the world this year, down about 18.5% since the start of January.

The broader 50-share NSE index was trading down 1.2% at 4,957.4 points.

There were 772 losers Against 531 that gained in the broader market with 208.2 million shares changing hands.

The MSCI’s measure of Asian markets other than Japan was down 1.45%, Japan’s Nikkei dropped 2.03% and South Korea’s Kospi was trading lower by 1.31%.

US stock futures tumbled more than 2% on Monday in electronic trading, hit hard after European markets slumped on renewed fears the euro zone’s sovereign debt crisis is worsening.

Stocks on the move

• State-run Neyveli Lignite Corp gained 3.17% after the Business Standard newspaper said that it plans to invest Rs40,200 crore to build a power plant each in the states of Tamil Nadu, Rajasthan and Uttar Pradesh.

• Tyre maker Dunlop India rose 5% as the Business Standard said it is looking to raise 3% to Rs350 crore by selling a piece of land in Mumbai.