Indian shares trim weekly gains on profit booking post RBI policy

By Bharath Rajeswaran

BENGALURU (Reuters) -Indian shares declined for the second straight session on Friday, dragged by a broad-based slide amid sustained profit booking after the Reserve Bank of India signalled tighter monetary conditions could persist.

The blue-chip Nifty 50 closed 0.38% lower at 18,563.40, while the benchmark S&P BSE Sensex fell 0.35% to 62,625.63.

Despite the slide in the last two sessions, the benchmarks held on to weekly gains, aided by a 1% rise in three sessions ahead of the RBI’s policy on Thursday.

Eleven of the 13 major sectoral indexes declined, with fast moving consumer goods (FMCG), information technology (IT) and public sector banks losing between 0.8% and 1.3%.

The fall in domestic equities was in contrast to the rise in Wall Street overnight as well as Asian equities on Friday, as odds of a rate pause in the Fed’s upcoming meeting on June 14 increased after data showed weekly jobless claims hit over a 1-1/2-year high, signalling a cooling economy. [FEDWATCH]

Investors also await rate decisions from the European Central Bank and Bank of Japan next week and inflation data, both in India and the U.S, due next week. [MKTS/GLOB]

India’s central bank kept the repo rate at 6.50% for a second straight meeting on Thursday but indicated that monetary conditions will remain tight to bring inflation down to the 4% target.

“The markets will consolidate after the sharp run-up,” Avinash Gorakshakar, head of research at Profitmart Securities, said, adding that good monsoon and sustained earnings growth would be the next triggers for re-rating.

Gorakshakar also advised investors to be selective in broader markets. “Everything across the board, smallcaps, midcaps, have gone up. It’s time for consolidation.”

Among individual stocks, One 97 Communications rose over 5% to a 10-month high after global brokerage CLSA reiterated “buy.”

On the other hand, shares of Indian Energy Exchange tumbled 10%, after several analysts downgraded the stock, on market coupling concerns.

($1 = 82.4831 Indian Rupees)

(Reporting by Bharath Rajeswaran in Bengaluru; Editing by Dhanya Ann Thoppil, Sohini Goswami, and Janane Venkatraman)