Markets drop more than 1%; metals fall

Markets drop more than 1%; metals fall

Mumbai: Indian shares fell more than 1% on Tuesday afternoon, led by a decline in metals makers as base metal prices dropped. Weak European markets added to the negative sentiment.

At 2:40pm, the 30-share BSE index was down 1.09% at 17,196.35 points, with 28 components declining. The 50-share NSE index was down 1% at 5,169.35.

Markets were 0.3% higher earleir led by gains in financials, but trading was choppy in the absence of clear direction from Asian markets and as investors shifted their focus to less fancied mid-cap stocks.

Export-driven outsourcers such as Tata Consultancy Services and Infosys Technologies nudged higher after a set of strong US economic data revived confidence about recovery in the world’s largest economy.

By 10:45am, the 30-share BSE index was trading up 0.27% at 17,433.56, with 21 of its components gaining. The 50-share NSE index was up 0.3% at 5,239.80.

“The action is less in frontline stocks. We are seeing more interest in mid-cap stocks," said Deven Choksey, CEO of KR Choksey Shares. “Essentially, stock picking is the key." The BSE Midcap index was trading 0.4% higher, outperforming the broader market.

Choksey said a long-running legal battle between Mukesh Ambani-led Reliance Industries and Reliance Natural Resources controlled by estranged younger brother Anil was keeping investors wary.

A verdict from India’s top court is expected before chief justice K.G. Balakrishnan - who is part of a three-member bench that heard the dispute over terms of a deal for RNRL to buy gas at below the price set by the government case - retires this month.

“The hangover of the case is not letting the market go anywhere," Choksey said.

Reliance Industries, which has the highest weight on the Sensex, was trading 0.4% lower while Reliance Natural Resources rose 2.5%.

Financials gained on promising long-term outlook in an advancing economy. Top lender State Bank of India was up 0.5% while rival ICICI Bank climbed 0.4%. Mortgage lender Housing Development Finance Corp was up 1.3%.

Leading outsourcers, which derive a significant portion of their revenue from the United States, edged higher as signs of improvement in the economy pointed to likely improved order flow.

The US government reported an unexpected rise in construction spending in March, and consumer spending edged up for a sixth-straight month.

Sector leader Tata Consultancy rose 0.4% and Infosys gained 0.1%.

In the broader market, gainers were nearly double the losers on volume of 113 million shares.