Indian shares fell nearly 2 percent on Friday to log their fourth straight weekly loss, their longest weekly losing streak since the Lehman collapse, as fears of the United States sliding into a recession triggered a global flight from risky assets. Lingering worries about a slowdown in India's economic growth and profitability of domestic companies due to surging interest rates in Asia's third-largest economy also weighed on investor sentiment.
Finance Minister Pranab Mukherjee said on Friday the Indian stock markets had been affected by the US market sentiments but the country's economy was robust and the growth story was intact. "The market will continue to be in bearish trend and there is more downside left in the absence of definite signal on how the European situation would be resolved," said Anshu Kapoor, private wealth head at Edelweiss Global Wealth Management.
Infosys, India's No 2 software firm, was the top loser in the Indian market, ending down 5.5 percent at 2,224.70 rupees, its lowest closing level in 21 months, on worries about a drop in outsourcing demand in a weak global economy. India's showcase $76 billion software and services sector, which has already been reeling under competitive pressure and sluggish demand, counts the United States and Europe as its two biggest markets.
The benchmark 30-share BSE index closed down 1.99 percent, or 328.12 points, at 16,141.67, with 21 components in the red, after having fallen as much as 2.9 percent to go below the 16,000-mark for the first time in about 15 months. The BSE index, which is down 21 percent this year, dropped 5 percent on the week, extending its losses to 14 percent in four straight weeks, its longest weekly losing streak since September 2008.
Morgan Stanley had pared this week its growth forecast for the Indian economy for the current fiscal year to 7.2 percent from 7.7 percent earlier. India's three largest IT companies - Tata Consultancy, Infosys and Wipro - dragged the software services sector index down as much as 6.3 percent to its lowest level since November 2009.
Tata Consultancy slumped 3.5 percent to 928.95 rupees and Wipro closed 2.4 percent lower at 320.35 rupees. Larsen & Toubro, India's top engineering and construction firm, closed down 5.1 percent at 1,545.55 rupees on concerns that a slowdown in the country's economic growth would crimp investment in infrastructure projects. Top power equipment firm Bharat Heavy Electricals also closed down 4.6 percent at 1,681.95 rupees. Shares in index heavyweights Reliance Industries and the country's No 2 lender ICICI Bank, dropped 1.2 percent and 3.7 percent, respectively, on selling by institutional investors, traders said. The 50-share NSE index closed down 1.99 percent at 4,845.65 points. In the broader market, losers were ahead of gainers in the ratio of 3:1 on relatively heavy volume of 700 million shares.