Indian shares fell for a second day in a row on Monday as HDFC fell ahead of its earnings results this week, with sentiment also hit after U.S. jobs data and falling inflation in China reinforced concerns about the global economy.
Corporate earnings results, and more importantly, the guidance given could be key in determining whether India's main stock indices can sustain their double digit gains this year. The rallies have come despite challenging fiscal and economic outlooks that have dented the rupee currency.
A shortfall of nearly 50 percent of the average rainfalls in the seasonal monsoon period so far has become the latest domestic worry, given worries about the impact on rural consumers.
"Q1 is gonna be a mixed bag with certain sectors gaining from rupee depreciation, but overall we are expecting moderation in margins due to moderation in volumes," said Paras Adenwala, MD and Principal Portfolio Manager at Capital Portfolio Advisors.
"Relatively pharma, consumer goods, private sector banks, non-bank financials would do better than others," he added
The 30-share BSE index fell 0.74 percent to 17,391.98, marking its biggest percentage fall since June 18. The 50-share NSE index fell 0.79 percent.
Both indices have gained 13-14 each for the year, thanks in part to a strong June in which investors have grown more optimistic about government policy reforms to boost growth.
However, in the short-term, the focus will be on earnings results. Shares of Housing Development Finance Corp, India's biggest mortgage lender, fell 1.2 percent ahead of its report on Wednesday.
Infosys, the country's second-biggest software services exporter, fell 0.3 percent ahead of its results on Thursday, though larger rival Tata Consultancy Services, which reports on the same day, added 0.9 percent.
Global risk aversion also dented sentiment, after China's inflation eased more than expected in June, signalling reduced demand for goods. The data followed a Friday report showing the United States added less jobs than expected in June.
Power generation stocks fell to profit-taking for a second straight day after recent strong gains: Adani Power fell 4.8 percent, while JSW Energy lost 5.1 percent and Tata Power lost 2.2 percent.
Consumer good companies fell on worries about the impact low rainfalls could have on the farming sector, and hence the wider impact on consumption. Hindustan Unilever fell 0.5 percent, while cigarette maker ITC fell 0.44 percent.
However, among gainers, Indraprastha Gas rose 1.88 percent on media reports the company raised prices of compressed natural gas (CNG) to offset the impact of the rupee's fall.
TVS Motor Co Ltd surged 7.8 percent after confirming a report from business newspaper Mint it was in talks with a unit German auto maker BMW AG's unit to source technological know-how to develop high-end motorcycles.
The shares gained even as TVS Motor said nothing had been firmed up.
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