Indian shares slip

Indian shares dropped 0.4 percent on Wednesday as investors took profits after a sharp rally seen since last month, with fears of a spike in inflation fuelled by higher global oil prices also weighing on sentiment. Banking stocks led the losses, after a central bank deputy governor indicated on Tuesday that interest rates might keep on rising as the Reserve Bank of India tries to control inflation.
The 30-share BSE index ended 74.62 points lower at 19,612.20, with 20 of its components closing in the red. The broader 50-share NSE index closed down 0.3 percent at 5,891.75 points. "Some profit-taking is happening after the recent run-up in shares and there have been good inflows from foreign portfolios," said Neeraj Dewan, director at Quantum Securities.
Lenders ICICI Bank and HDFC Bank shed 0.9 percent and 0.6 percent, respectively, while the sector index fell 0.4 percent after rising more than 12 percent in just over a month. "Banks are down on worries about inflation and the steps the Reserve Bank of India will take to contain this," Dewan said.
But, Citigroup said it believes the March quarter would be another healthy three-month period for banks, supported by continued healthy credit growth and year ago's low base. "Overall, the impact of tougher macro conditions (rates, liquidity and inflation) should largely be offset by high credit growth and stable asset quality," Citigroup analysts said in a note on Tuesday. Oil prices stayed near a 2-1/2 year peak on Wednesday, supported by widespread unrest in the Middle East and North Africa and dollar weakness ahead of European central bank's rate decision on Thursday.
India imports about 80 percent of the oil it consumes and the global price spiral could add to New Delhi's woes of tackling high food and fuel inflation. Oil explorer Cairn India fell nearly 4 percent ahead of a cabinet decision on whether to let Vedanta Resources take control of the firm in a $10 billion deal that would give the UK-listed miner its first taste of oil.
Telecom stocks Bharti Airtel and Reliance Communications fell 1.9 and 1.2 percent, respectively, on concerns over an investigation into a multi-billion dollar telecoms graft scandal that has rocked the country's political and business establishment. Police accuse Reliance Telecom, a unit of Reliance Communications, and three Reliance ADA officials, of conspiring to set up Swan Telecom as a front company to gain valuable radio spectrum. The benchmark stock index rose 9.1 percent in March, its biggest monthly gain in six months, but is down 4.5 percent in the year to date.
Data from the market regulator showed foreign funds bought $2.5 billion of shares since the start of March, after being net sellers in January and February. In the broader market, gainers led losers in a ratio of 1.5:1, on a volume of 416.3 million shares.