BSE Sensex falls for 3rd day; Wipro, Reliance Inds slump

A man walks past the Bombay Stock Exchange (BSE) building in Mumbai September 21, 2010.

Credit: Reuters/Danish Siddiqui/Files

MUMBAI | Wed Apr 27, 2011 5:22pm IST

MUMBAI (Reuters) - The BSE Sensex dropped for a third straight session and closed 0.5 percent lower on Wednesday, amid steady world stocks, with dropping nearly 3 percent as the third-largest software firm's tepid growth forecast let down investors.Traders expect choppy trade in a narrow range before the expiry of monthly derivatives contracts on the National Stock Exchange on Thursday and the central bank's annual policy meet on May 3.
Reliance Industries, which has the highest weighting on both the key indexes, dropped 1.5 percent following Goldman Sachs' downgrade of the stock to neutral from buy, and as an oil ministry source said it could be penalised for falling short of targeted gas production at its D6 block.
Oil and Natural Gas Corp was among the big gainers, firming 2.3 percent after the U.S. bank upgraded the stock to buy from neutral based on stable-to-improving oil realisations, volume growth and attractive valuations.
The 30-share BSE index declined 0.49 percent, or 96.66 points to 19,448.69, with 23 of its components losing ground.
"The volatile trade will continue as investors are not comfortable on making big commitments before the events lined up," said Rakesh Rawal, head of private wealth management at Anand Rathi, referring to the Federal Reserve's meeting on Wednesday, the contracts expiry and the central bank review.
The U.S. Fed is expected to keep rates near zero and signal that it is in no hurry to scale back its massive support for the economy.
The 50-share NSE index dropped 0.6 percent to 5,833.90 points.
In the broader market, declining shares outpaced advancing ones in the ratio of 1.4:1 on volume of 614 million shares on the NSE, less than its 90-day average daily volume of 647 million shares.
The BSE main index is still up 9.1 percent since the start of March, backed by foreign fund inflows of $3.4 billion into Indian equities. It is down 5.2 percent so far in 2011.
Wipro shares closed 2.9 percent lower at 451.10 rupees, after the outsourcer, which gets most of its revenue from exports, warned wage increases would hit operating margins this year. The Bangalore-based firm met forecasts with a 14 percent rise in fourth-quarter net profit.
"The guidance makes one uneasy and it looks like the company will not meet overall analysts' expectations for FY12," said Ambareesh Baliga, chief operating officer at Way2Wealth Securities.
"We could see further downgrades for the sectoral stocks in days to come."
The IT sector index closed 0.2 percent lower.
Financials reeled under pressure with the banking sector index declining 0.7 percent ahead of the Reserve Bank of India's (RBI's) policy statement on Tuesday.
The RBI is seen raising rates by a quarter percentage point at the policy and analysts now expect it to raise rates by a total of 75 basis points for the rest of 2011, or 25 basis points more than they expected in mid-March, the latest Reuters poll found on Tuesday.
Leading lenders State Bank of India and ICICI Bank fell 0.8 percent and 1.1 percent respectively.
The MSCI All-Country World Index and its emerging market sub-index were up 0.2 percent each by 1024 GMT.

STOCK THAT MOVED
* Ambuja Cements declined 4.3 percent to 150.95 rupees, after the cement maker said late Tuesday its March quarter net profit fell 12 percent.
* Air express courier firm Blue Dart jumped 7.7 percent to 1,488.15 rupees, after its January-March profit rose 52 percent from a year ago.
* Indoco Remedies rose nearly 3 percent to 455 rupees, after the drugmaker said its quarterly net profit rose 48 percent.
* Clariant Chemicals firmed 2.8 percent to 728 rupees, after the specialty chemicals maker said its March quarter net profit soared to 2.2 billion rupees from 325.3 million rupees a year ago.

MAIN TOP THREE BY VOLUME ON NSE
* GVK Power on 28.6 million shares
* Unitech on 15.1 million shares
* Suzlon Energy on 11.9 million shares

(Reporting by Ami Shah; editing by Malini Menon)