Indian shares fall on profit-taking

Indian shares fell on Wednesday, retreating from record highs hit earlier in the session, as the initial surge after an unexpected rate cut by the central bank was offset by profit-taking and on speculation foreign investors sold bluechips. Falls also tracked lower Asian shares as investors grew cautious before upcoming central bank meetings and US jobs data.
The benchmark BSE index ended 0.72 percent lower after earlier rising as much as 1.46 percent to mark its all-time high of 30,024.74, surpassing the psychologically important 30,000-level for the first time. Its previous record high was 29,844.16 hit on January 30. The broader NSE index lost 0.82 percent after earlier rising as much as 1.37 percent to mark a record high of 9,119.20, marking its third consecutive all-time high.
The indexes had initially surged after India's central bank unexpectedly lowered its policy rate for the second time this year on Wednesday, backing a government that is pushing to revive economic growth as inflation cools. Shares touched record highs on Wednesday as interest rate-sensitive stocks such as HDFC Bank gained after India's central bank eased monetary policy for a second time this year, raising hopes about credit growth and the broader economy.
The record highs came after India's central bank lowered its policy repo rate by 25 basis points to 7.5 percent on Wednesday, delivering its second cut this year on the back of easing inflation and a weaker economy. The cut also came after the government committed to fiscal discipline when it unveiled its 2015-16 budget on Saturday despite delaying its medium term fiscal deficit target of 3 percent of gross domestic product by a year to 2017/18.
"It is great to see the central bank has gone in the direction of industry demands. Fiscal deficit target being delayed by a year is not that big a worry until the RBI is comfortable with the quality of it," said Atul Kumar, equity fund manager at Quantum AMC. Gains were led by interest rate-sensitive shares with the NSE bank index rising as much as 2.9 percent. ICICI Bank rose 2.1 percent, HDFC Bank gained 1 percent and Kotak Mahindra Bank was up 2.5 percent.
Among state-run lenders, State Bank of India advanced 2 percent, while Bank of Baroda was up 2.5 percent. Among real estate developers DLF rose 3.2 percent while Unitech gained 3 percent. In auto manufacturers, Mahindra and Mahindra rose 1.1 percent and Maruti Suzuki India was 0.7 percent higher.