Markets shed 0.4%; banks dip, Reliance up

Markets shed 0.4%; banks dip, Reliance up

Mumbai: Indian shares eased 0.4% on Tuesday with financials losing ground as investors took profits ahead of an expected increase in interest rates by the Reserve Bank of India next week.

Trading was choppy with energy giant Reliance Industries, top car producer Maruti Suzuki and cigarette-to-hotels group ITC (ITC.BO) posting gains. Traders said the undertone remained firm on hopes for continued investment by foreign funds, who have moved in more than $11 billion since the start of September.

“There is still some steam left in the rally, looking at the pace at which money has been flowing in. Risk appetite is still good," said Anish Marfatia, head of sales trading at Avendus Securities.

The 30-share BSE index dropped 81.73 points to 20,221.39, with 19 of its components declining, after flipping between positive and negative territories.

In the broader market, declining shares led advancing ones in a ratio of 1.1:1 on relatively high volume of 456 million shares, provisional data showed.

The benchmark has gained 15.8% so far this year, bolstered by foreign fund inflows of a record $24.3 billion. The NSE-50 index dropped 0.4% to 6,082. Marfatia said he expected the broader index to reach 6,200 in the next 10 days.

The RBI, which is scheduled to review policy on 2 November, warned on Tuesday that surging food prices were structural and would put upward pressure on inflation and interest rates.

“Persistent price increases in commodities for which there are less effective substitutes, with other things remaining equal, will raise the potential rate of inflation over a period of time," RBI Deputy Governor Subir Gokarn said in a speech.

The RBI is widely expected to raise interest rates by another 25 basis points next Tuesday as it continues to battle headline inflation that rose to 8.62% on an annual basis in September.

Top lender State Bank of India shed 1.8%, while rivals ICICI Bank and HDFC Bank dropped 0.9% and 0.6% respectively.

Telecom stocks fell after Idea Cellular, the No. 6 mobile phone operator, lagged market estimates as quarterly profit fell on lower call prices, triggering concerns other players may follow suit. Idea shed nearly 3% while leading telecom operators Bharti Airtel and Reliance Communications lost 2.4% and 1.7% respectively.

Reliance Industries gained 0.6% after the Economic Times reported the company aimed to reach peak gas output of 80 million standard cubic metres per day at its KG D6 block off the country’s east coast in about 12 months.

ITC climbed 1.3%, riding on the robust domestic consumption story in Asia’s third-largest economy.

Maruti Suzuki rallied 3.6% in an attempt to catch up with the broader market rally. The stock has been a laggard, rising only 0.2% year-to-date, on worries about pressure on profit margins.

Non-ferrous metals producer Sterlite Industries dropped 0.1% after it reported a slightly lower-than-expected 5% rise in September quarter net profit.

Amongst world’s broader indexes, the MSCI world equity index dropped 0.2% by 1016 GMT, MSCI’s emerging market stock benchmark was barely changed.


Third-largest outsourcer Wipro (WIPR.BO) nudged up 0.2% at Rs431.15, after falling more than 8% over two sessions following disappointing July-September results.

Procter & Gamble Hygiene and Health Care fell 2.8% to Rs2,050.65 as the cosmetics & toilet preparations maker said its September quarter net dropped 39%.

Outsourcer Tech Mahindra firmed 2.7% to Rs785.55 after it was one of three firms picked to handle customer service for Bharti Airtel’s (BRTI.BO) newly acquired mobile networks in 16 African countries.

Retailer Titan Industries rose 6.2% to Rs3,491.35 as it posted forecast-beating second-quarter numbers on the back of strong growth in its key watch and jewellery segments.