MUMBAI: Indian shares turned a shade weaker in choppy trade on Friday, dragged by miners and financials, with investor caution ahead of a likely cabinet reshuffle this weekend also aiding the retreat.
Coal India , the world's largest coal miner, tumbled as much as 8.4 percent to 361 rupees in early trade, after a government source said a panel of ministers had approved a new bill calling for coal miners to share up to 26 percent of their profits with local communities.
The draft law proposes the profit-sharing formula in a bid to smooth land acquisition. While industry bodies are reconciled to sharing some profits, they have baulked at 26 percent, saying that will sharply raise business costs and deter investors.
Iron ore exporter Sesa Goa plunged as much as 13 percent, while steelmakers Hindalco , Jindal Steel & Power , Sterlite Industries , and Tata Steel -- which operate captive coal mines -- dropped more than 2 percent.
At 11.48 a.m., the 30-share BSE index was down 0.23 percent at 19,034.53 points, after rising 0.1 percent in early trade, with 11 of its components losing ground.
"The draft mining bill is spoiling the sentiment. But we need to wait for clarifications from the mining ministry or from the companies on the quantification of this impact," Jigar Shah, senior vice president at KIM ENG Securities, said.
"Probably, market may also be anticipating changes in the cabinet during the weekend," Shah added, citing this as another reason for the see-saw session.
Last week, the Indian prime minister said his plans to reshuffle his cabinet were a "work in progress" but declined to say whether there would be significant changes in top positions.
Foreign funds bought Indian shares worth $2.26 billion over 10 sessions to Wednesday, data from the market regulator showed.
The 50-share NSE index was down 0.3 percent at 5,714.80 points.Losers outpaced gainers in the broader market, with a total of 273.6 million shares traded on NSE.
Top lender State Bank of India dipped about 1 percent after raising its benchmark lending rate by 25 basis points on Thursday, joining rival ICICI Bank , which had raised its base rate last week.
Shares in ICICI Bank were down 1.6 percent.
India's central bank raised interest rates by 25 basis points in June, the 10th increase since March 2010, to combat stubbornly high inflation and putting pressure on banks to hike their lending rates.
The MSCI's measure of Asian markets other than Japan was up 0.69 percent while Japan's Nikkei was up 0.8 percent.
STOCKS ON THE MOVE
Dhanalaxmi Bank fell 3.5 percent after the lender's chief financial officer said the firm had called off a plan to raise 2.9 billion rupees via preferential allotment to a clutch of investors after one of the proposed investors backed off due to regulatory issues.
Man Infraconstruction Ltd rose 2.7 percent, after the company said it had got orders worth 950 million rupees.
TOP 3 MAIN STOCKS BY VOLUME ON NSE
Coal India on 10.1 million shares
Unitech on 9.1 million shares
Development Credit Bank on 4.9 million shares
Copyright Reuters, 2011
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