Indian shares declined for a second week in a row, shedding 1.5 percent on Friday, dragged by index heavyweight Reliance Industries as a source said gas output next year at key fields in its main producing block may drop 12 percent from current levels. Dealers expect the market to trade in a narrow range until quarterly earnings announcements, which would begin next month.
Reliance has written to the upstream regulator indicating gas output from the D1 and D3 fields in the Krishna-Godavari basin KG-D6 block may fall to 38 million standard cubic metres per day (mscmd) during 2012/13 from 42-43 mscmd now, the source, with knowledge of the letter, said on Friday. After market hours, Reliance said in a statement the figures were "purely provisional and indicative," adding projections on gas output could vary.
Reliance Industries, the country's top-listed firm, fell the most in nearly 11 months and closed 3.7 percent lower at 993.15 rupees. The news report erased $2.8 billion off the energy major's market capitalisation. "News flow on the E&P (exploration and production) business will continue to influence stock performance," J.P. Morgan analysts Pradeep Mirchandani and Neil Gupte said in a note.
J.P. Morgan said that with a drop in output, Reliance's FY12 EPS could be around 11.5 percent lower. The stock was the fourth-most traded on the National Stock Exchange. A total of 11.1 million shares changed hands on the BSE and NSE, nearly twice times the 90-day average daily volume. The 30-share BSE index declined 1.49 percent or 271.06 points to 17,878.81, taking its losses for the week to 1.6 percent, with 28 of its components closing in the red.
Foreign funds have trimmed their exposure to emerging markets such as India on inflationary concerns and rising borrowing cost. They have sold $1.7 billion worth of Indian shares this year until March 16, dragging the main index down 12.8 percent. Investors pulled $2.2 billion from emerging stocks in the days following the Japanese quake as emerging debt funds received small net inflows, investment banks said on Friday, citing data from EPFR Global.
Financial shares extended losses for the second session after the central bank raised interest rates on Thursday for the eighth time in 12 months, and its comments seemed to suggest a hawkish stance. Leading lender State Bank of India shed 1.1 percent, while rivals ICICI Bank and HDFC Bank dropped 0.9 percent and 1.6 percent respectively. Mortgage lender Housing Development Finance Corp fell 2.6 percent.
In the broader market, losers beat gainers in the ratio of 1.8:1, while 251 million shares changed hands on the BSE, lower than their 30-day average volume of 276 million shares. The 50-share NSE index declined 1.3 percent to 5,373.70 points.