India's key share index slid more than 1 percent on Monday as disappointing earnings from banks hurt investor sentiment, which is already beset with worries about a weakening trend in foreign fund investment this year. The 30-share Mumbai Stock Exchange index shed 1.2 percent to close at 6,106.43 points. The index has now lost 7.5 percent in 2005.
"We've had poor numbers from banks on lower treasury income, and traders are reducing their positions ahead of the holiday (on Wednesday) and the derivatives contracts expiry (on Thursday)," said Ajit Surana, managing director of Dimensional Securities.
"Since sentiment is negative, bad earnings numbers are doing more harm than the positive effect of good numbers," he said.
Banks and software services firms were among the bigger losers, overshadowing sparkling earnings from auto makers Maruti Udyog Ltd and Mahindra & Mahindra Ltd.
State-run Canara Bank, which said quarterly net profit fell 27 percent, lost 5.3 percent and Syndicate Bank, another state-owned bank, tumbled 8 percent after it said it had slipped into the red in the quarter.
That dragged down India's second-largest commercial bank and a key index stock, privately owned ICICI Bank, by 2.5 percent. Software services firms fell on losses on the Nasdaq and a weaker US dollar, seen as impacting the export-dependent firms. Infosys Technologies Ltd, the second-biggest exporter, fell nearly 3 percent and the No 3 exporter, Wipro Ltd, dropped 4 percent.
Investor sentiment has been dampened in recent weeks by data showing that foreign institutional investors have sold more than $160 million worth of shares so far this month, after purchases of a record $8.5 billion in 2004.
Earlier, Maruti Udyog Ltd, India's top car maker by sales and majority-owned by Japan's Suzuki Motor Co, rose 4 percent after it said quarterly profit jumped 70 percent.
The rupee gained one-tenth of a percent to close at 43.7550/7650 per dollar, helped by demand for dollars from importers and companies trying to meet month-end payments.
Crude oil, India's biggest import item, also caused some anxiety as prices rose to within a dollar of $50 a barrel on Monday as a blizzard enveloped the US Northeast.
Uncertainty ahead of Iraq's elections and Opec's ministerial meeting - both on Sunday - bolstered oil prices, encouraging speculative hedge funds to rebuild long positions gradually.
The yield on the benchmark 10-year, 7.38 percent bond edged up by little over 1 basis point to 6.7457 percent, as worries about an upcoming issuance and the impact of firm oil prices on domestic inflation kept investors away.