MUMBAI Oct 17 Indian shares ended little
changed on Saturday after a special one-hour session to mark the
start of the new Hindu accounting year, as rich valuations
following the market's 80 percent rally this year pushed
investors to cash in profits.
No. 1 software-services firm Tata Consultancy Services
(TCS.BO) climbed 1.6 percent to 608.65 rupees, a day after it
beat forecasts with a 29 percent rise in quarterly net profit
helped by demand from recession-hit financial customers.
Declines in financials ICICI Bank (ICBK.BO), HDFC Bank
(HDBK.BO) and Housing Development Finance Corp (HDFC.BO) weighed
on the main index after it opened 0.7 percent higher.
"People's optimism about the market was reflected in the
opening, but the reality that the market is overbought is what
we are seeing at the close," Arun Kejriwal, strategist at
research firm KRIS, said.
The 30-share BSE index .BSESN ended up 0.02 percent, or
3.19 points, to 17,326.01 -- its highest close since mid-May
last year -- with losers and gainers evenly matched at the end
of the 60 minutes of trade that began at 1245 GMT.
It had earlier gained nearly 1 percent to 17,493.17 points,
its highest level in more than 17 months, as homes across Mumbai
were lit in kaleidoscopic colours and firecrackers graced the
evening sky to mark Diwali, the Hindu festival of lights.
The special session is held every year on Diwali during a
period considered auspicious, following a ceremony at stock
exchanges to worship the Hindu goddess of wealth, Lakshmi.
"One should not be too euphoric right now. The market has
already factored in a lot of the good news coming out," said
Amitabh Chakraborty, president of equities at Religare Capital.
The market has more than doubled since last year's special
session, a possibility that seemed unrealistic at the time as
the world financial system was haemorrhaging in the wake of the
collapse of U.S. investment bank, Lehman Brothers.
The main index lost more than half its value in 2008, making
it one of the worst-performing in the world. But since early
March this year, it has been a riding a worldwide rally in
stocks on hopes the global economy is on the steady road to
"It always happens that what falls the most, rises the most.
There was extreme pessimism last year," Chakraborty said.
Traders expect the good run to continue in the long term,
but have warned of short-term consolidation as the rally since
March has stretched valuations.
The BSE index trades at 18.9 times forward earnings, much
higher than benchmarks in other emerging markets such as South
Korea, Indonesia and Thailand that trade at multiples of 12-16,
but below the 22.2 times multiple for the Shanghai Composite
Brazil trades at about 16.1 times forward earnings, while
Russia trades at a multiple of just 7.9.
Still, a surge of liquidity flowing into emerging markets is
expected to sustain the market and prevent a significant
decline. Foreign funds have ploughed in more than $13.5 billion
into Indian stocks this year after they withdrew about $13
billion last year.
"We could see a 15 to 20 percent rise by the next Diwali,"
KRIS' Kejriwal said.
On Saturday, private-sector lender ICICI Bank fell 1.1
percent to 948.40 rupees, while rival HDFC Bank slid 0.9 percent
to 1,703.40 rupees.
Top mortgage lender Housing Development Finance Corp dropped
0.5 percent to 2,809.80 rupees.
In the broader market, advancers led losers by more than 3
to 1 on volume of 173 million shares.
The 50-share NSE index .NSEI ended flat at 5,141.80
(Editing by Toby Chopra)