The Indian market ended on a subdued note Thursday, in tandem with weak Asian and European peers, as a sell-off in U.S. stocks overnight amid grim economic data and the downgrade of Greece's local and foreign currency bond ratings deeper into junk status by Moody's sparked worries over the outlook for global growth this year.
Wall Street suffered its worst session since August Wednesday, with the major averages ending down over 2 percent each, as downbeat reports on private-sector job growth and the manufacturing sector and news of major automakers reporting weak U.S. vehicle sales for May suggested the economic recovery is running out of steam.
Data out of the U.S. showed manufacturing activity in May expanded at the weakest pace in more than a year and employers hired fewer workers than forecast, fueling concerns over the outlook for the global economy.
The benchmark 30-share Sensex opened at 18,426 and fell to a low of 18,391 early in the session before cutting losses and ending down 115 points or 0.62 percent at 18,494. The broader Nifty index fell by 42 points or 0.74 percent to 5,550 and the BSE mid-cap and small-cap indexes closed down about 0.7 percent each.
The market breadth on the BSE was fairly negative, with declining shares outpacing gaining ones by 1657 to 1149 shares. Banking, metal, realty and auto stocks led the declines, while FMCG stocks posted notable gains on defensive buying.
Among the prominent decliners, ICICI Bank fell 3.1 percent and HDFC Bank ended down 1.3 percent on turning ex-dividend. In the auto pack, Maruti Suzuki, Mahindra & Mahindra and Tata Motors fell over 2 percent each.
Copper producer Sterlite shed 2 percent, aluminum maker Hindalco lost 1.5 percent and steel maker Tata Steel slipped 1.3 percent, as base metal prices declined on the London Metal Exchange overnight. In the IT sector, Wipro lost 1.2 percent, TCS fell 0.9 percent and Infosys ended down 0.3 percent.
On the other hand, Hindustan Unilever climbed 3.5 percent on the buzz that U.S.-based Procter & Gamble is likely to make a 38 billion pound bid for its European rival Unilever. Nestle India, ITC, Dabur India, Tata Global Beverages and Colgate Palmolive rose by 0.4-3.0 percent after the country's weather office reportedly said monsoon rains were 12 percent above normal in the week to June 1. A normal monsoon means higher farm out, which should help tame the spiraling food inflation.
Among the other prominent gainers, two-wheeler manufacturer Bajaj Auto added 2.2 percent, power producers NTPC and Tata Power gained about 0.4 percent each, and state-run lender SBI ended up 0.1 percent. Energy giant Reliance Industries closed up half a percent ahead of its annual general meeting on Friday.
Hero Honda Motors added half a percent after reporting a 15 percent rise in May vehicle sales. Likewise, Jaiprakash Associates closed half a percent higher after posing a modest 3 percent rise in cement shipments for May.
Tata Teleservices (Maharashtra) soared 6.5 percent on reports that the Central Bureau of Investigation has found no illegality in granting 2G licenses to Tata Group. PBA Infrastructure jumped 8 percent after its joint venture bagged a Rs.425-crore road project
State-run oil major HPCL rose half a percent and IOC gained 1.1 percent after crude prices fell for a second day on Thursday on a private inventory report showing a surprise gain in U.S. crude supplies.
Sun TV Network plunged 28 percent to a 52-week low on reports of a CBI inquiry after the BJP alleged that the company, belonging to Maran's brother Kalanithi Maran, was an indirect beneficiary in the 2G spectrum allocation scam.
Rival Raj Television Network climbed 6.6 percent on expectations that the company will benefit from growing woes of Sun TV. SpiceJet, another company controlled by the Maran family, slumped 16 percent.
ADAG stocks lost ground. Reliance Infrastructure slumped 4.7 percent, Reliance Communication tumbled 4.1 percent, Reliance Capital lost 2.6 percent and Reliance MediaWorks plunged 6.2 percent.
In economic news, India's annual food inflation rate for the week ended May 21 eased to 8.06 percent from 8.55 percent in the previous week, as prices of cereals, fruits and rice moderated, government data released today showed. The inflation remained in single digit for the tenth consecutive week.
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