Indian shares dropped for a third straight session and closed 0.5 percent lower on Wednesday, amid steady world stocks, with dropping nearly 3 percent as the third-largest software firm's tepid growth forecast let down investors. Traders expect choppy trade in a narrow range before the expiry of monthly derivatives contracts on the National Stock Exchange on Thursday and the central bank's annual policy meet on May 3.
Reliance Industries, which has the highest weighting on both the key indexes, dropped 1.5 percent following Goldman Sachs' downgrade of the stock to neutral from buy, and as an oil ministry source said it could be penalised for falling short of targeted gas production at its D6 block. Oil and Natural Gas Corp was among the big gainers, firming 2.3 percent after the US bank upgraded the stock to buy from neutral based on stable-to-improving oil realisations, volume growth and attractive valuations.
The 30-share BSE index declined 0.49 percent, or 96.66 points to 19,448.69, with 23 of its components losing ground. The 50-share NSE index dropped 0.6 percent to 5,833.90 points. In the broader market, declining shares outpaced advancing ones in the ratio of 1.4:1 on volume of 614 million shares on the NSE, less than its 90-day average daily volume of 647 million shares.
The BSE main index is still up 9.1 percent since the start of March, backed by foreign fund inflows of $3.4 billion into Indian equities. It is down 5.2 percent so far in 2011. Wipro shares closed 2.9 percent lower at 451.10 rupees, after the outsourcer, which gets most of its revenue from exports, warned wage increases would hit operating margins this year. The Bangalore-based firm met forecasts with a 14 percent rise in fourth-quarter net profit.
The IT sector index closed 0.2 percent lower. Financials reeled under pressure with the banking sector index declining 0.7 percent ahead of the Reserve Bank of India's (RBI's) policy statement on Tuesday. Leading lenders State Bank of India and ICICI Bank fell 0.8 percent and 1.1 percent respectively.
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