Indian shares decline

Indian shares snapped a four-session winning run and eased 0.3 percent on Tuesday, as investors took profits amid concern accelerating inflation pressures could push up borrowing costs. Lenders such as State Bank of India, ICICI Bank and HDFC Bank, all of which had posted spectacular gains in 2010, led the losers on talk the central bank will raise interest rates.
The Reserve Bank of India (RBI), which had raised rates six times in 2010 before pausing in December, is scheduled to review policy on January 25. Expectations for good quarterly earnings helped limit the drop in share prices. "The market may form a top before earnings come in next week, which is generally the case when results are expected to be good. There may be some consolidation after the results," said Arun Kejriwal, director of research firm KRIS.
The 30-share BSE index closed down 62.33 points at 20,498.72 with 18 of its components declining. The benchmark had risen 17.4 percent in 2010 on the back of record foreign portfolio investments of $29.3 billion. The 50-share NSE index shed 0.2 percent to 6,146.35.
The banking sector index dropped 2.5 percent, after rallying more than a third in 2010. In the broader market, gainers and losers were nearly equal in number on relatively better volume of 445 million shares. Top lender State Bank of India dropped 3.1 percent, while ICICI Bank and HDFC Bank shed 3.5 percent and nearly 2 percent respectively. "The RBI has tough choices to make - tackling inflation and taking care of growth," said Sunder Subramaniam, senior manager of institutional sales at brokerage Sharekhan.
"There are expectations building up that we could see an interest rate hike in some time. Also, bank stocks have performed well, and there is some profit booking." Maruti Suzuki, which sells every second new car in India, closed 0.1 percent higher after it joined peers in reporting strong December sales. Its sales rose an annual 17 percent in December, usually a slower month, but were down 11.8 percent from November.
Energy major giant Reliance Industries climbed 2.1 percent in an attempt to catch up after it underperformed the Sensex with a nearly 3 percent decline in 2010. Firm base metal prices pushed non-ferrous metals producer Sterlite Industries 0.6 percent higher.
Tata Steel, the world's seventh-largest maker of the alloy, dropped 1.3 percent on concerns steel mills face higher costs after Australian coal mines were hit by flood.
Spot cooking coal prices have risen around 10 percent in a month and look set to move sharply higher as Asia's steel mills scour the globe for new suppliers to cover production lost to Australian floods.