Indian shares fall slightly on monsoon, tax woes

Indian shares fell slightly on Tuesday as investors encashed profits ahead of an expected government clarification on a controversial tax proposal and amid concerns over the impact erratic monsoon rains may have on the economy.
The benchmark 30-issue Bombay share index ended lower for the first time in four days, closing down 0.35 percent at 4,957.88 points as investors sold some of their holdings in technology and automobile stocks.
The index had risen 2.5 percent in the previous three days.
"Investors are playing it safe ahead of the Finance Minister's statement on transaction tax," said New Delhi-based K.K. Mittal, a fund manager with Escorts Mutual Fund.
Finance Minister Palaniappan Chidambaram is expected to offer clarification on Wednesday on a proposal to levy a 0.15 percent tax on securities purchased through stock exchanges.
The planned tax was unveiled in the federal budget for the current fiscal year to March.
Shares in automobile makers fell, reflecting those concerns.
Hero Honda Motors, India's biggest motorcycle maker, dropped 3.5 percent and Bajaj Auto, the second-biggest, shed 2.5 percent.
Technology shares fell on worries that an aggressive price band set by Tata Consultancy Services (TCS), India's largest software services exporter, for a forthcoming initial public offering (IPO) could lead some investors to shuffle their holdings in the sector.
Infosys Technologies, the nation's second-biggest software services exporter, dropped 2.1 percent and Wipro, the third-biggest exporter, shed 1.7 percent.
TCS set a lower-than-expected price band of 775-900 rupees a share on Monday, setting it on course for what could be India's biggest initial public offering (IPO). The company's forward price-to-earnings ratio of about 21 compares with 23 for Infosys.
Bonds eased in dull trade, with investors awaiting cues in a market unsure about the medium-term outlook for interest rates.
Traders are also awaiting the clarification on the securities tax proposal as profit margins in the debt market rarely exceed 0.05 percent.
The yield on the 10-year benchmark ended 3 basis points higher at 5.8511 percent.