Indian shares drop

Indian shares snapped a two-day rise and slipped 0.6 percent on Wednesday, tracking weak world markets after comments from the US Federal Reserve Chairman Ben Bernanke added to worries about the slowing global economy, with outlook turning cautious. Financials led the decline, hurt by sustained increases in interest rates by the central bank.
Subir Gokarn, a deputy governor at the Reserve Bank of India, told television channel CNBC-TV18 at a conference on Wednesday it was inevitable that high rates would at some point affect growth, but that the central bank would look to limit that impact. Rising interest rates have also begun to hit consumer spending in India and dent new investments by companies. Economic growth in the January-March quarter was the slowest in five quarters. The 30-share BSE index shed 0.55 percent or 101.33 points to 18,394.29, with 19 components losing ground.
The 50-share NSE index or Nifty shed 0.5 percent to 5,526.85 points. A Reuters Technical Analysis showed that the Nifty index, which is already down nearly 10 percent year to date, could get rougher as technicals point to a target of 5,434 points in the near-term.
"The international scene is worrying. Bernanke's comments raised concerns over a slowdown," said Ambareesh Baliga, chief operating officer at Way2wealth Securities. "If there is not enough liquidity pumped in, we could see a correction in the developed markets." Foreign funds have bought $212 million worth of equities in June after being net sellers of $1.16 billion in May.
Losers beat gainers in the ratio of 1.2:1 on the NSE, in a volume of 511 million shares, lower than its 90-day daily average volume of 617 million shares. Top mobile operator Bharti Airtel erased early losses and closed flat after a top executive told Reuters the company is on target to generate $5 billion in revenue from the African continent.
Energy major Reliance Industries, which has the highest weight on Sensex, fell 0.9 percent, a day after it had risen 2.2 percent. Leading lenders State Bank of India, ICICI Bank and HDFC Bank dropped between 0.7 percent and 1.1 percent. Mortgage lenders Housing Development Finance Corp slid 1.6 percent.