Indian shares fell 1.2 percent on Friday to their lowest close in nearly a month and posted their first weekly loss in four as fears of a recession in the developed world lowered risk appetite. Lenders and energy major Reliance Industries led the fall. Software services exporters reversed earlier gains after a slide in the rupee to end lower.
The outlook for next week remains shaky and the market would largely be guided by developments in the global economy amid the European crisis and worries of a recession, traders said. "The market will be basically dependant on the developments in the US and European situations," said R.K. Gupta, managing director at Taurus Asset Management in New Delhi. "If something positive comes out there, that will help our market also."
The main 30-share BSE index closed 1.22 percent lower at 16,162.06, its lowest close since August 26. Nineteen of its components declined. Trade remained choppy with the index falling as much as 1.9 percent and briefly turning positive in afternoon trade. The index had slumped 4.1 percent on Thursday, in its biggest one-day fall in more than two years. The benchmark ended down 4.6 percent on the week, its worst week since the first week of August. On the year, the index is down 21.1 percent.
The wider 50-share NSE index fell 1.14 percent to 4,867.75. In the broader market, there were more than two losers for every gainer on a total volume of about 644 million shares. Reliance Industries, the country's most valuable firm and the heaviest stock in the main index, fell 2 percent to 770.60 rupees. Reliance shares are down more than 27 percent this year amid worries about slowing gas output.
Leading private sector banks ICICI Bank fell 2.2 percent, while HDFC Bank lost 3.4 percent. Top lender State Bank of India, however, bucked the trend to end 0.7 percent up. The sector index closed 1.52 percent down. Export-driven software services companies such as Infosys and Tata Consultancy Services initially climbed after the rupee slid to its lowest in more than 28 months, but closed down 0.6 percent and 0.4 percent, respectively.
The sector gets most of its revenue from the United States and Europe. Tata Motors closed 5 percent down, hurt by worries over slowing demand for cars, traders said. Rising interest rates and fuel prices have taken a toll on automobile sales in the world's second-fastest growing major auto market after record growth last year. The sector index ended 1.59 percent lower.