* Draft bill calling for mining profit share drags miners
* Reliance Industries falls on Morgan Stanley downgrade
* ICICI Bank drops 2.72 pct, State Bank of India dips 0.2
(Updates to close)
By Manasi Phadke
MUMBAI, July 8 Indian shares ended higher for
the third week in a row, but slipped more than 1 percent in
choppy trade on Friday, dragged by losses in miners, Reliance
Industries and financials and some profit booking.
Coal India , the world's largest coal miner,
plunged 8 percent , after a government source said a
panel of ministers had approved a new bill calling for coal
miners to share up to 26 percent of their profits with local
Shares in steelmakers Jindal Steel & Power
and Tata Steel fell 1.91 percent and 1.94
percent respectively on the draft bill, while metal makers
Sterlite Industries and Hindalco shed more
than 3 percent each. These firms operate captive coal mines.
Iron ore exporter Sesa Goa tumbled 4.4 percent.
The proposed profit-sharing formula is a bid to smooth land
acquisition. While industry bodies are reconciled to sharing
some profits, they have baulked at 26 percent, saying that will
sharply raise business costs and deter investors.
"Prima facie, the costs may go up and the profits may come
down, but it's a very prima facie opinion," said Jayesh Shroff,
fund manager at SBI Mutual Fund.
"We need to see the fine print of the bill," Shroff said,
adding, he expects the market to remain volatile in the near
The 30-share BSE Sensex shed 1.15 percent at
18,858.04 points, with 22 of its components declining.
The index has lost 8 percent of its value year-to-date, but
has gained 0.6 percent over the past one week.
"The market has risen so much..., obviously it will look for
some kind of a corrective phase," said Nilesh Doshi, president
of equity research at Techno Shares & Stocks Ltd.
"Some profit-booking is taking place," Doshi said.
Foreign funds bought Indian shares worth $2.26 billion over
10 sessions to Wednesday, data from the market regulator showed.
Reliance Industries fell 1.8 percent after Morgan
Stanley downgraded the energy giant's stock to "equal weight"
from "overweight" and slashed its price target to 956 rupees
from 1,206 rupees.
The stock is cheap, but there are no short-term positive
triggers, the brokerage said in a research report. It also cited
lack of clarity on cash flow deployment in the short term and
concerns surrounding the production ramp-up as reasons for the
ICICI Bank fell 2.7 percent, while top lender
State Bank of India regained some lost ground to close
0.2 percent lower , after falling as much as 1 percent
State Bank of India raised its benchmark prime lending rate
by 25 basis points on Thursday, joining rival ICICI Bank, which
had raised its base rate last week.
India's central bank raised interest rates by 25 basis
points in June, the 10th increase since March 2010, to combat
stubbornly high inflation and putting pressure on banks to hike
their lending rates.
The 50-share NSE index was down 1.19 percent at
A total of 983 losers outpaced 437 gainers in a total volume
of 649.8 million on the NSE.
The MSCI's measure of Asian markets other than Japan
was up 0.61 percent, while Japan's Nikkei
was up 0.66 percent.
STOCKS THAT MOVED
* Dhanalaxmi Bank fell 5 percent, after its chief
financial officer said the lender called off a plan to raise 2.9
billion rupees by selling a 19.6 percent stake at a premium to a
group of investors after one of them backed out.
* Man Infraconstruction Ltd rose 5.3 percent,
after the company said it has bagged orders worth 950 million
TOP 3 MAIN STOCKS BY VOLUME ON NSE
* Unitech on 50.5 million shares
* Rushil Decor on 26.6 million shares
* Coal India on 19.4 million shares
FACTORS TO WATCH
* For technical analysis double click on www.reutersindia.net
* Rupee at 2-mth high on strong dlr inflows, Asians peers
* Indian bond yields steady; auction results awaited
* Dollar rallies on strong U.S. jobs data bets
* Brent slips $1 ahead of payrolls
* Euro zone banking worries dent jobs cheer
* Futures little changed before payrolls report
* For closing rates of Indian ADRs
(Editing by Malini Menon)
(firstname.lastname@example.org; +91-22-6636 9059; Reuters
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