Indian shares post worst monthly fall in over two years

Indian shares on Monday posted their worst monthly fall in more than two years, tracking weak global markets as anti-government protests in Egypt led to risk aversion, with inflation and rate rise fears further dampening sentiment. The 30-share BSE index shed 0.4 percent on Monday leading to a 10.6 percent fall in the month, its lowest since October 2008.
The Nifty or NSE-50 index was down 0.1 percent at 5,505.90 points. "There is a lot of concern in the market about food security, oil prices," said Arun Kejriwal, director of research firm KRIS. "Most certainly a dead cat bounce is overdue, but I am not sure if that will make a difference to the direction of the market."
Telecoms stocks ended lower on India's plan to de-link second-generation radio (2G) spectrum that now comes free with telecoms licences and ask companies to pay for spectrum based on market-linked prices. Bharti Airtel ended 2.6 percent lower, while Reliance Communications shed 2 percent. Idea Cellular closed 0.8 percent lower. The top two software firms Tata Consultancy Services and Infosys Technologies were among the top losers, falling 2.2 percent and 1.8 percent respectively, on growing uncertainty about the outsourcing business momentum.
The chief executives of Tata Consultancy and Infosys told Reuters last Friday at Davos that Europe's debt crisis and rising inflation at home could slow the growth that they have enjoyed in recent years. The main index fell 68.2 points to close at 18,327.76, with 17 of its components losing ground.
"Egypt is not a very big market for foreign institutional investors. There will be a reaction because of how it may affect the other regions, but a major reaction won't happen in India," said R.K. Gupta, managing director of Taurus Mutual Fund. More than 100 people have been killed during six days of protests in Egypt aimed at toppling President Hosni Mubarak. A wider conflagration in the region could threaten the flow of oil at a time when policymakers in emerging markets are already bedevilled by high food and fuel prices and some developed economies are gaining momentum.
Indian investors' sentiment has also been dented by soaring inflation and rate rises that are starting to hit corporate margins and leading to more foreign fund managers slashing holdings.
Foreign funds have pulled out over $1.06 billion from Indian equities in January until Thursday, in contrast with a record $29.3 billion they pumped in last year. The Indian rupee hovered near two-month lows pressured by the fund outflows. Banking shares were mixed after the banking sector index shed over 5 percent in the past three sessions on fears rising interest rates will hit demand for loans. Mortgage lender Housing Development Finance Corp fell 2.7 percent and HDFC Bank dropped 0.8 percent, while top lenders State Bank of India and ICICI Bank bucked the trend and added 0.9 percent and 0.3 percent.
Top car maker Maruti Suzuki dropped more than 5 percent to a new 12-month low after its December-quarter net profit slipped 18 percent and its finance chief said cost pressures and competition would keep margins under pressure. However, the shares rebounded towards the end of the session to close up 1.6 percent at 1,252.80 rupees.
Oil and Natural Gas Corp rallied more than 7 percent intraday after its quarterly net profit more than doubled, boosted by rising crude prices and one-time gains. The shares ended 3.7 percent higher at 1,177.55 rupees. In the broader market, losers led gainers in the ratio of 1.5-to-1 on a volume of 329 million shares.