Friday, October 30, 2009

Indian shares post worst monthly loss in a year

Indian shares fell 7.2 per cent in October and logged their biggest monthly fall in a year, after they closed 1 per cent lower on Friday as
investors gave a thumbs down to results from some key corporates such as Reliance Industries and Bharti Airtel.

Energy giant Reliance Industries slumped 3.6 per cent to 1,931.25 rupees, its lowest close in 10 weeks, after it posted its fourth straight decline in quarterly profits.

"We believe that the refining segment will remain under pressure in the near term, thus, impacting RIL's (Reliance Industries) performance," Prabhudas Lilladher said in a note.

"Overhang on the ongoing battle between RIL and Reliance Natural Resources continues to remain a concern. Hence, we maintain 'reduce' rating on the stock," it said in a note.

Top mobile operator Bharti Airtel tumbled 6.4 per cent to 292.15 rupees, as it gave a downbeat outlook due to a nasty price war after posting its slowest pace of profit growth in at least six years.

The 30-share BSE Index closed 0.97 per cent or 156.44 points lower at 15,896.28, after rising to as much as 16,360.88 in early trade, cheered by a rise in global markets, as data showed United States returned to economic growth.

"The whole concept of buy at dips' and sell at rise' is being reversed," said R K Gupta, managing director of Taurus Mutual Fund.

"Results from quite some companies have disappointed, triggering the fall. People have clarity on fiscal 2010 earnings, but beyond that it's all guesswork," added Gupta.

The benchmark shed 5.4 per cent in the week declining is all sessions, and posted its highest weekly loss in more than three and a half months, as corporate results failed to cheer and the central bank set a hawkish tone at its quarterly policy meet.

Foreign funds have infused around $14.4 billion in Indian equities so far this year which have led to a rise of nearly 65 per cent in the benchmark.

Prime Minister Manmohan Singh said India will push forward with reforms and needs to increase investment in rural education, health and infrastructure to raise the economic growth rate up to 10 per cent.

Earlier this week, the central bank forecast growth for 2009/10 at 6 per cent with an upward bias.

Sterlite Industries rose as much as 8.3 per cent to 808 rupees, after it said its unit Sterlite Energy filed to raise up to 51 billion rupees though an initial public offer.

The stock closed 3.4 per cent higher at 771.55 rupees. Utility Indiabulls Power Ltd, which raised about $380 million in a heavily subscribed IPO, slumped as much as 22 per cent on debut and could hit investors appetite for a long and growing IPO pipeline.

The stock closed 12.8 per cent lower at 39.25 rupees. Private lender ICICI Bank climbed 2.4 per cent to 789.60 rupees, as it posted a small but surprise rise in quarterly profit on trading gain and lower costs that offset a rise in bad debts.

State-run explorer Oil & Natural Gas Corp shed 2.8 per cent to 1,132.70 rupees, after it reported a lower-than-expected 5.8 per cent rise in quarterly net profit.

Power producer Tata Power plunged 4.4 per cent to 1,343.20 rupees, after it said its September quarter net profit dropped by 28 per cent.

In the broader market, losers outnumbered gainers in a ratio of 1.5:1 in a relatively higher volume of 494 million shares.

The 50-share NSE index closed 0.8 per cent lower at 4,711.70.

Indian markets are shut on Monday for a public holiday.

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