Indian shares fell 0.22 percent on Monday as investors sold on concerns sluggish economic growth would dent corporate earnings due to higher costs and interest rates. Prime Minister Manmohan Singh on Sunday said the Indian economy would likely withstand an uncertain external environment to grow about 7 percent this fiscal year, lower than the government's revised forecast of about 7.5 percent last month.
"The investor sentiment was negative right from start. But despite of prime minister's comments, the market has not fallen in a big way," said R.K. Gupta, managing director at Taurus Mutual Fund. "There could be some positive trend in the market if we see good numbers from industrial production and Infosys earnings awaited later this week." Infosys, the country's second largest software exporter, will kick off the October-December earnings on Thursday.
Shares of Energy major Reliance Industries led Monday's losses with a 1.2 percent fall, followed by top telecoms company Bharti Airtel that declined 3.16 percent. Royal Bank of Scotland has downgraded Bharti and Idea Cellular to hold from buy, and Reliance Communications to sell from hold, citing greater regulatory risk and potential impact of policy uncertainty on growth. Idea Cellular fell 0.06 percent and Reliance Communications 0.45 percent.
Consumer goods maker Hindustan Unilever fell 0.56 percent while cigarette maker ITC rose 0.17 percent after falling as much as 1 percent earlier. The main BSE index fell 34.08 points to end at 15,814.72, with 16 of its components ending in the red. Top private lender ICICI Bank snapped early losses and gained 0.35 percent after Macquarie upgraded the stock to outperform from neutral on expectations of improvement in margins and better-than-expected asset quality.
Smaller rival HDFC Bank rose 1.05 percent. Trucks and cars maker Tata Motors fell 1.3 percent to 200.60 rupees after Deutsche Bank downgraded the stock to sell from buy, citing weak demand and rising competition that could squeeze margins in the domestic market. Mahindra & Mahindra, the country's largest utility vehicles maker, fell 0.11 percent.
Motorcycle makers Hero MotoCorp and Bajaj Auto also fell 0.1 and 1.8 percent respectively. "Whenever foreign institutional investors (FIIs) are showing interest in the market, it prompts buying at lower levels and selling at higher levels," said Deven Choksey, chief executive at brokerage K.R. Choksey. The index had briefly entered the positive territory on Monday after hitting the day's low. The FIIs have purchased equities worth $213.66 million in three sessions to Friday.
Choksey expects the market to be choppy and remain in a narrow range at least till Thursday's Infosys numbers. Top software exporter Tata Consultancy Services and third largest Wipro erased early gains to fall 0.1 and 1.4 percent respectively, after the Indian rupee firmed against the US dollar. The broader 50-share NSE index fell 0.1 percent to 4,742.80. In the broad market, there were 1.78 gainers for every loser on low volume of 582.33 million shares.
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