Indian shares shed 1.8 percent on Friday and fell to their lowest close in the month, as investors opted to lock in profit ahead of state-run Coal India's up to $3.5 billion share sale, the country's largest ever, next week. It fell for the second straight week, but the benchmark index is still up 15.2 percent year-to-date on the back of robust $22.5 billion foreign fund inflows.
IT bellwether Infosys Technologies led the losses and closed 3.4 percent lower, after rising as much as 2 percent to a record high of 3,249 rupees on forecast-beating September quarter earnings. The 30-share BSE index closed 1.82 percent or 372.59 points lower at 20,125.05, with just one of its components closing in the green. "The way the market was going up, it only seemed to be a one-way journey. Profit booking is expected at such levels," said Gajendra Nagpal, CEO of Unicon Financial.
"Also, quite a few retail investors are lightening their positions for the Coal India IPO (initial public offering)." Outsourcers shed the most, even as Infosys raised its full-year guidance. "While the near-term demand momentum remains good, we believe that there is limited clarity on the CY11 tech spending and appreciating rupee remains a risk," brokerage Religare said in a note.
While some market participants find Infosys shares attractive and are placing their bets on growth outlook, others find the upside limited as the stock trades near record highs and worry about the strengthening of the rupee. The IT sector index dropped 3.3 percent, but is still up 17.1 percent so far this year.
Sector leader Tata Consultancy Services closed 3.5 percent lower after rising as much as 2.5 percent to an all-time high of 1,010 rupees. Rival Wipro dropped 3.6 percent to 473.50 rupees. Financials declined as annual headline inflation in Asia's third-largest economy accelerated slightly in September, reinforcing pressure on the central bank to raise rates at its November 2 policy review.
Leading lender State Bank of India dropped 3 percent, while rivals ICICI Bank and HDFC Bank shed 1.1 percent and 1.5 percent respectively. In the broader market, more than two shares fell for every share that gained on a moderate volume of 477 million shares. The 50-share NSE index declined 1.9 percent to 6,062.65 points.