Indian shares declined for the second straight quarter after rising for the previous eight as spiralling inflation and a slowdown in economic growth dispelled investors, and kept the outlook for the quarter ahead subdued. "The market could be rangebound in the September quarter," said R. K. Gupta, managing director of Taurus Mutual Fund.
Gupta said that it was difficult to ascertain whether foreign institutional investors (FIIs) would continue their buying as domestic woes prevailed and eurozone issues were still not completely resolved. "It depends on what FIIs' appetite is like, for which global cues need to be watched. But, a runaway rally is not likely." Foreign funds have been net buyers of only $322 million of Indian shares so far in 2011. They had pumped in a record $29.3 billion in 2010.
The progress of monsoon rains, which arrived in June and are a key to India's trillion-dollar economy, will be eyed for more cues. On Thursday, the 30-share BSE index closed 0.81 percent, or 152.01 points, higher at 18,845.87 points, with 21 components advancing. The gains in the day were supported by firm world equities as investors breathed a sigh of relief after Greece took a step closer to avoiding the eurozone's first sovereign default.
The 50-share NSE index firmed 0.8 percent to 5,647.40. Trade was volatile towards the close of day as monthly derivative contracts expired on the NSE. The BSE index fell 3.1 percent in the quarter ended June, but notched a 1.9 percent gain in June - its first monthly gain in three months. It is down 8.1 percent in 2011, making it one of the worst performing major markets in the world.
The realty sector index dropped the most this quarter - falling 14.6 percent - as rising interest rates and spiralling property prices drove away buyers, with the top-listed developer DLF declining 21.6 percent in the period. On the other hand, the consumer goods sector rose nearly 10 percent this quarter and was the best performing sector, powered by the consumption story in Asia's third-largest economy.
Sector majors ITC, Hindustan Unilever and Britannia Industries jumped between 11.5 percent and 28.6 percent in the April-June quarter. Banks also logged a loss for the quarter, on worries higher interest rates and slowing growth may crimp demand for loans. Leading lenders State Bank, ICICI Bank and HDFC Bank shed 13 percent and 1.9 percent respectively.
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