Indian shares drop over 1% after pullback rally fizzles

People watch a large screen displaying India’s benchmark share index on the facade of the Bombay Stock Exchange (BSE) building in Mumbai, India, January 20, 2016. REUTERS/Shailesh Andrade

BENGALURU, June 22 (Reuters) – Indian shares fell more than 1% on Wednesday, with the metal index plunging over 4%, while global investors remained concerned over monetary tightening policy and recession fears.

The NSE Nifty 50 index (.NSEI) fell 1.09% to 15,468.5, as of 0443 GMT, while the S&P BSE Sensex (.BSESN) dropped 0.9% to 52,026.81. Both indexes had clocked their best session in three weeks on Tuesday.

“Yesterday’s rally was a pullback in a bearish market. But there was not enough steam to sustain the momentum. There was a lot of short covering as well,” said V K Vijayakumar, chief investment strategist at Geojit Financial Services.

India’s 10-year benchmark yield was down marginally to 7.42%, from its previous close of 7.48%.

Metal stocks declined after their short rebound on Tuesday, as a stronger U.S. dollar and rising supply concerns sent London copper prices down more than 1%.

The Nifty Metal index (.NIFTYMET) tumbled 4.5%, with Hindustan Copper (HCPR.NS) sinking 8.4%.

The Nifty energy index (.NIFTYENR) lost 1.6%, with Oil and Natural Gas Corp (ONGC.NS) and Gas Authority of India (GAIL.NS) down 4%, each.

Brent crude was down at $113.32 per barrel, after a push by U.S. President Joe Biden to bring down soaring fuel costs.

Asian stocks fell in volatile trade, failing to extend an overnight Wall Street rally, while the Japanese yen hit a fresh 24-year low against the dollar.

Hero MotoCorp (HROM.NS) and Bajaj Auto (BAJA.NS) were among the four lone gainers on the Nifty 50 index.

Jain Irrigation Systems (JAIR.NS) jumped nearly 17%, after the company said on Tuesday it would sell a 78% stake in its international irrigation business to Temasek-owned micro-irrigation company Rivulis.

Reporting by Tanvi Mehta in Bengaluru; Editing by Rashmi Aich

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