Indian shares posted their biggest fall in 2-1/2 weeks on Friday, as bluechips continued to be hit by concerns that weaker global markets would dent demand from foreign investors, although Infosys Ltd surged after earnings beat estimates. Global shares, as measured by the MSCI All-Country World index, fell to a six-month low as investors worry about the prospect of a widespread economic slowdown while US monetary stimulus nears its end.
This led India's indexes to their third consecutive weekly falls, with banking and metal stocks leading the decline on Friday. Investors will now focus on consumer inflation data due on Monday, with a Reuters survey expecting inflation to have risen 7.2 percent, according to a poll of 28 economists, weaker than 7.8 percent in August. The benchmark BSE index closed down 1.28 percent at 26,297.38, declining for the fourth session in the past five. The index fell 1.02 percent for the week.
The broader NSE index fell 1.26 percent to close at 7,859.95, falling 1.1 percent in the week. "The fall has more to do with international markets. This has given better entry valuations as our market is still a 'buy-on-decline' market," said Deven Choksey, managing director, KR Choksey Securities. Foreign investors have played an integral role in the record-setting rally in Indian shares this year, buying a net $13.8 billion worth of stocks till Thursday. "We have seen Infy earnings and I expect positive earnings surprises from corporates. We believe earnings growth will accelerate in the second half of this fiscal," Choksey said.
Infosys Ltd surged 6.6 percent after its July-September earnings beat estimates, triggering a rally in the sector. However, Friday was more about falls, with financial stocks leading the decline. State Bank of India, which gained 2.8 percent in the previous session, closed down 1.14 percent, while ICICI Bank ended 2 percent lower. The stock gained 2.8 percent on Thursday.
Among metal stocks, Hindalco Industries, which gained 6.1 percent in the previous session, closed down 4.9 percent, while Tata Steel ended 4.2 percent lower. Vedanta Group companies plunged after shares of its British-listed parent, Vedanta Resources Plc, fell 8 percent after reporting lower quarterly output at its oil and gas, zinc and Zambian copper businesses.
Sesa Sterlite ended 4.6 percent lower, while Hindustan Zinc Ltd closed down 4.2 percent. Heavyweight consumer stocks have also witnessed selling pressure. ITC Ltd closed 3.4 percent lower, while Hindustan Unilever ended down 2.5 percent.