Indian shares erased early gains to fall to their lowest close in three weeks, dropping for three straight sessions, dragged down by the country's largest utility vehicles maker Mahindra & Mahindra after it reported a drop in quarterly profit. Investor sentiment was also hurt by data showing October headline inflation was worse than forecast, raising doubts about the central bank's outlook that price pressures will abate by the year-end.
Asian stocks rose on hopes that new technocratic leaders in Italy and Greece will take decisive action to save their indebted nations from bankruptcy and fend off a wider financial meltdown in the eurozone.
Export-driven outsourcers rose as optimism over Europe, their second-biggest market, boosted the sector's outlook. The eurozone debt crisis is a worry for the sector that has been looking to increase its sales to the region to hedge against its excessive exposure to the United States. Infosys, which has the second biggest weightage on the benchmark index after Reliance Industries, rose 1.2 percent to 2,808.80 rupees. Smaller rival Wipro rose 1.4 percent.
The main 30-share BSE index closed down 0.43 percent, or 74.08 points, at 17,118.74 - its lowest closing level since October 24. More than two-thirds of its components closed in the red. The index, which rose as much as 1.16 percent earlier, is still down 16.5 percent this year.
The broader 50-share NSE index closed 0.4 percent down at 5,148.35 points. Automakers dragged on the benchmark index the most, with Mahindra and Mahindra falling as much as 7 percent. It closed down about 6 percent at 791.05 rupees. A series of interest rate hikes have hurt automakers this year, as India's middle-class, the primary target segment for most carmakers, shied away from new purchases due to costlier loans and rising prices. Top carmaker Maruti Suzuki dropped 3 percent. Tata Motors fell 2 percent ahead of its results for the second quarter. It is expected to report net profit fell 7 percent.