Indian shares on Monday shed 0.6 percent on weak global peers as a weaker-than-expected gross domestic product data from Japan added to concerns over a faltering global economic recovery. Reliance Communications slid as much as 4.6 percent, as India's No 2 mobile operator disappointed investors with a bigger-than-expected fall in quarterly profit, as sharply lower call charges after a vicious price war hit margins.
Credit Suisse cut the target price on Reliance Communications to 170 rupees from 185 rupees, while maintaining a "neutral" rating on the stock. The 30-share BSE index dropped 116.25 points to 18,050.78, with 23 of its components closing in the red. It is up 3.4 percent so far in 2010, outperforming the broader MSCI's index of Asian shares ex-Japan and emerging markets index which have fallen 2.7 percent and 0.9 percent respectively year to date.
"Market is not going anywhere. It is just consolidating. There are no major negative or positive factors currently," said Vaibhav Sanghavi, director at Ambit Capital. Foreign funds have invested a net of $11.4 billion in Indian stocks year to date, a portion of which was absorbed by the primary market. SKS Microfinance, India's largest microlender that raised about $358 million in an initial public offering, rallied as much as 17.8 percent on debut.
The stock closed at 1,088.58 rupees, compared with an issue price of 985 rupees per share. Oil explorer Cairn India declined 6.4 percent as miner Vedanta Resources said it will acquire a 51 percent to 60 percent stake in the Indian firm. India's largest iron ore exporter Sesa Goa will hold 20 percent in Cairn India. "All the positives currently seem to be priced in. There is no near-term benefit for Cairn India shareholders from this deal, which is why the stock is coming off," said Neeraj Dewan, director of Quantum Securities.
Non-ferrous metals producer Sterlite Industries, which is a unit of Vedanta, was almost flat at 160.60 rupees after declining 4.3 percent last Friday. Sesa Goa shed 8.9 percent.
Financials dropped even as the annual headline inflation eased more sharply than expected to high single digits after five months, but a top government adviser said it was still high and unacceptable. Top lender State Bank of India fell 1.02 percent while leading private lenders ICICI Bank and HDFC Bank dropped 1.9 percent and 0.2 percent respectively. Drugmaker Cipla shed 3.6 percent after it reported a 6.2-percent rise in its June quarter net profit last Friday. In the broader market, declining shares outpaced advancing ones in a ratio of 1.3:1 on a volume of 418.6 million shares. The 50-share NSE index fell 0.6 percent to 5,418.30 points.
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