The BSE Sensex (SENSEX :15411.63 -106.86
) fell 0.7 percent on Friday as poor rains dampened hopes for a rapid rebound in Asia's third-largest economy, but a strong surge the previous day helped lift the main index 1.7 percent for the week.
The top economic advisor to the prime minister said drought would have an impact on growth in 2009/10 and he expected the economy to expand 6 to 6.5 percent, lower than the 7 percent forecast in the annual budget in early July.
"Exports are not doing well, industrial production is showing signs of picking up, but the drought will have an impact on growth," C. Rangarajan told reporters in the southern city of Hyderabad.
With the U.S. economy showing signs of levelling out and Germany and France emerging out of recession quicker than expected, there was underlying support for the stock market.
However, traders expected the market to be choppy till clarity emerged on the government's response to the weak monsoon.
The 30-share BSE index fell 0.69 percent, or 106.86 points, to 15,411.63, with all but 5 stocks falling, a day after rallying 3.3 percent to its best close in more than week.
No. 2 lender ICICI Bank (ICICIBANK: 744.85 -12.35) led the losses on concerns the weak monsoon would hurt an economic revival and delay its plans to boost loan growth. The stock fell 1.7 percent to 744.15 rupees.
State-owned Oil and Natural Gas Corp and energy giant Reliance Industries (RELIANCE : 2036.45 +12.15
) rose as oil rose towards $71 a barrel.
Adani Power and state-run NHPC Ltd have raised a combined $1.9 billion since late July with the IPOs subscribed more than 20 times each.
Outsourcer Infosys Technologies (INFOSYS : 2039.85 -25.35), which gets most of its revenue from the United States, fell 1.2 percent to 2,039.85 rupees after U.S. retail sales for July came in much weaker than forecast on Thursday.
The monsoon in India was 56 percent below normal over the past week, government data showed on Thursday, disappointing farmers for a third consecutive week while consumers felt the pinch of rapidly rising food prices.
The wholesale price index fell in the year to Aug. 1 for the ninth week in a row, but there were signs prices could rise faster in the coming months due to the weak monsoon and growing manufacturing demand.
Despite concerns about rich valuations after the benchmark leapt 92 percent from a 2009 low in early March, a rush of liquidity pouring into equity markets could support stocks in the short term as investors look to buy on dips, traders said.
In the broader market, 1,427 gainers led 1,252 losers on more than average volume of 442 million shares.
The 50-share NSE (NIFTY: 4580.05 -24.95) index was fell 0.5 percent to 4,580.05 points.
Nifty August 2009 futures were at 4561, at a discount of 19.05 points as compared to the spot closing of 4580.05. Turnover in NSE's futures & options (F&O) segment was Rs 63,891.72 crore, lower than Rs 65,552.20 crore on Thursday, 13 August 2009.
SW Steel August 2009 futures were at discount at 730.85 compared to the spot closing of 738.25.
DLF August 2009 futures were at discount at 392.40 compared to the spot closing of 395.50.
IFCI August 2009 futures were near spot price at 53.05 compared to the spot closing of 53.10.
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