Indian shares fell 1.7 percent on Friday, snapping a three-day winning streak, as profit booking emerged and a lack of clarity on new stimulus measures re-ignited concerns over the health of the US economy and drove investors away from equities. Disappointment grew after a speech by the US Federal Reserve chief lacked details on plans to spur economic growth after a $447 billion jobs package plan by US President Barack Obama.
The 30-share BSE index fell 1.74 percent, or 298.57 points, to 16,866.97, with 23 of its components declining. The index had gained nearly 3 percent in the past three trading sessions and on Thursday touched its highest close since August 5. Software stocks led the losses. The United States is one of the biggest markets for India's $76 billion information technology sector.
No 2 software services exporter Infosys fell 2.74 percent, while sector leader Tata Consultancy Services, ended 1.93 percent down. The main index rose 0.27 percent this week, its second straight weekly gain after falling for five consecutive weeks. Foreign funds bought just over $500 million of local stocks so far in September after selling $2.2 billion in the last month, according to data from the market regulator.
The 50-share NSE index closed down 1.82 percent at 5,059.45. In the broader market, advancing stocks led declines 493 to 940 on a volume of 763 million shares. Energy major Reliance Industries ended down 3.13 percent a day after India's federal auditor criticised the company and the government over development of the country's key natural gas field in the Krishna Godavari (KG) basin and called for revamping profit sharing arrangements from oil and gas blocks.
Reliance shares, which have the heaviest weight on the main index, are down 22 percent year to date, compared with a 18 percent fall in the benchmark index. Banking stocks also fell 2 to 4 percent on expectations the central bank may again raise rates next week. HDFC Bank ended down 2.16 percent, while bigger rival ICICI Bank fell 2.41 percent. State Bank of India, the market leader, ended down 3.52 percent.