Indian shares rose for the third week in a row but fell for the fourth consecutive session, declining 0.7 percent on Friday, and traders expect the market to be subdued next week after the recent sharp rally. Auto stocks declined as traders booked profits after Bank of America-Merrill Lynch cut its sector profit forecast by 3 percent for the current fiscal year that started in April.
"We expect returns to be muted this year driven by - earnings downgrades, on slowing demand and higher costs and -sector de-rating, due to competition," analyst S. Arun said in a note. The sector index fell 1.9 percent on Friday but it still up nearly 14 percent since the end of February. The 30-share BSE index fell 0.71 percent, or 139.73 points, at 19,451.45 points, with 24 components declining, after starting higher. It managed to eke out a 0.2 gain for the week.
Market breadth was in favour of losers as they beat gainers in the ratio of 1.9 to 1, in a volume of 409 million shares, much higher than the 30-day daily average volume of 292 million. The main index had jumped 9.1 percent in March, posting its biggest gain in six months. "It was too big a rise - that happened a little too soon. So, it needs to plateau out," said Prasanth Prabhakaran, president of retail broking at IIFL.
Foreign funds have bought shares worth nearly $3 billion since the beginning of March, on the view most negatives were already priced in after the decline in the first two months of 2011. Investors continued to trickle back into emerging markets over the past week. Equity funds received $5.7 billion in inflows in the week to April 6, the best week since mid-November 2010, banks said on Friday, citing data from EPFR.
Automobile companies pulled back after the rally in March. Tata Motors, Maruti Suzuki, Mahindra & Mahindra and Bajaj Auto dropped between 0.6 percent and 2.8 percent. Energy giant Reliance Industries, which has the highest weight on the main index, dropped 1.5 percent. It has gained more than 6 percent since the start of March. Export-focused software firms such as Tata Consultancy Services, Infosys Technologies and Wipro declined on worries an appreciating rupee could squeeze their margins. The 50-share NSE index shed 0.7 percent to 5,842.20.
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