MUMBAI The Sensex fell on Friday to its lowest levels in 2013 as drug maker Dr. Reddy's retreated a day after reporting a larger-than-expected fall in quarterly earnings, while software service exporters fell on profit-taking.
However, Tata Motors (TAMO.NS) rose 2.4 percent, recovering from an earlier fall of as much as 3.1 percent, as traders saw the initial losses sparked by a drop in quarterly earnings as overdone given expectations for a recovery in profits at subsidiary Jaguar Land Rover.
Analysts say sentiment remains cautious ahead of the 2013/14 budget to be unveiled on February 28, amid fears it would include populist spending measures that could threaten the government's fiscal deficit target.
"With industrial output data and inflation numbers out, there is no key development expected till the budget, so the market is expected to remain range-bound in the absence of any macro data before the build-up to the budget starts," said Kaushik Dani, fund manager at Peerless Mutual Fund.
India's annual wholesale price inflation slowed to 6.62 percent in January, government data showed on Thursday, lower than the 7 percent expected in a Reuters poll of economists.
The Sensex fell 0.15 percent, or 29.03 points, to end at 19,468.15, its lowest close since December 31, 2012.
The index fell 0.08 percent for the week, its third weekly decline.
The broader Nifty fell 0.16 percent, or 9.55 points, to end at 5,887.40. It earlier hit its lowest since December 26, 2012 and dropped 0.27 percent for the week.
Dr. Reddy's Laboratories (REDY.NS) (RDY.N), India's No.2 drug maker by sales, fell 3 percent after it reported a larger-than-expected 29.2 percent drop in quarterly net profit on Thursday.
Bank of America Merrill Lynch downgraded Dr. Reddy's to "neutral" from "buy", saying "a slight" increase in core profit estimates was being offset by a fading U.S. drug pipeline and moderating growth.
Software service exporters fell on profit-taking, with Infosys (INFY.NS) ending down 0.9 percent after rising 2.1 percent in the previous two sessions, while Tata Consultancy Services (TCS.NS) fell 0.4 percent a day after touching its all time high of 1,455.80 rupees.
Shares in DLF Ltd (DLF.NS) fell 2 percent a day after India's largest listed real estate developer reported a net profit of 2.85 billion rupees, missing market expectations.
Indian midcap shares fell on a mix of disappointing earnings and worries about the economic outlook. Analysts expect midcap shares to remain weak until risk sentiment improves.
Suzlon Energy Ltd (SUZL.NS) fell 8.6 percent after the wind turbine maker said its quarterly net loss had widened to 11.55 billion rupees.
United Breweries (Holding) Ltd (UBHL.NS) shares ended 4.95 percent down. UB Group, the parent of debt-laden Kingfisher Airlines (KING.NS), said it was in talks with lenders to the carrier to cut their exposure by using proceeds from a stake sale in a group company to Diageo Plc (DGE.L).
Besides Tata Motors, among the gainers was Bharti Airtel (BRTI.NS), India's largest telecoms carrier, whose shares ended 1.6 percent higher, up from a steep fall of 4.4 percent on Thursday.
Jet Airways (JET.NS) rose 3.7 percent on speculation that a long-awaited deal to sell a stake to Abu Dhabi's Eithad Airways would be announced next week, dealers said.
(Additional reporting by Manoj Dharra; Editing by Prateek Chatterjee)