Stocks at 2-week closing low; banks, L&T dip

Stocks at 2-week closing low; banks, L&T dip

Mumbai: Indian shares fell for the third straight session and closed 1.3% lower on Thursday to their lowest in two weeks, hurt by a decline in global equities and as results from engineering firms failed to cheer.

Global equities edged lower with investors in Europe and Asia picking up on overnight weakness on Wall Street where there was a late sell-off.

Leading banks State Bank of India and ICICI Bank, which saw a steep rise recently, continued to fall as investors locked profits.

Moody’s Investors Service on Wednesday downgraded the supported ratings of 13 Indian commercial banks after its global review of systemic support indicators for individual banking systems.

State Bank, which has risen more than 33% since the start of September, dropped 2.5%, while ICICI Bank, which has climbed nearly 19% in the same period, shed 4.1%.

The 30-share BSE Index closed 1.29% or 219.43 points lower at 16,789.74, its lowest close since 9 October. Only 6 of its components closed in the red.

“Valuations were really stretched and this kind of profit booking was called for and the global cues triggered it," said R. Ganesh, director of Systematix Shares. “It is perfectly healthy."

The benchmark has already shed 3% so far this week. It is still up 74% so far this year, fuelled by an inflow of over $14 billion from foreign funds.

The country’s headline inflation rose at a faster-than-expected pace by mid October to its highest level in 20 weeks, but government officials and analysts expect the central bank to leave rates unchanged at its policy review next week.

“RBI (Reserve Bank of India) may sound more hawkish this time. But it may wait before taking more concrete measures to see how growth pans out," said Shubhada Rao, chief economist at Yes Bank.

Engineering and Construction firm Larsen & Toubro fell 3.9%, its biggest single-day fall in more than two months to Rs1,608.50, as its September quarter sales lagged forecasts.

Larsen’s net profit for the quarter rose 26%, in line with street estimates.

“In our view, markets would view these results as disappointing, due to weak topline growth and perceived unsustainability of margin improvement in 1H (first half)," J. P. Morgan analysts Shilpa Krishnan and Sumit Kishore said in a note.

Rival Jaiprakash Associates declined as much as 7.7% to Rs236.10 as its second-quarter results disappointed, even though it declared a bonus share issue, dealers said.

“On the bottom-line front, the performance was below our expectations, due to the hit in margins and the increase in interest cost," Angel Broking, which has a ‘reduce’ rating on the stock, said in a note.

The stock fell the most in three and a half months and closed 6.8% lower at Rs238.2.

Energy giant Reliance Industries closed 2.24% lower at Rs2,133.55 while the Supreme Court continues to hear its arguments in its gas supply dispute with Reliance Natural Resources.

“There is a cloud over the outcome of the case, which is dragging the stock," said Ganesh.

In the broader market, losers were more than double the number of gainers, in a volume of 420 million shares.

The 50-share NSE index closed 1.48% down at 4,988.60, its lowest close in nearly two weeks.