Indian shares close lower as investors lock in recent gains

MUMBAI, Dec. 13, 2007 (Thomson Financial delivered by Newstex) -- Indian shares closed sharply lower Thursday, in line with Asian markets, as investors took profits after two days of record finishes.

The markets opened higher on optimism of the US Federal Reserve's 25-basis-point rate cut raising the foreign fund buying of Indian shares, but sentiment turned negative mid session.

'Whenever the markets hit a new high, profit taking sets in. Also, we tend to replicate the Asian markets. So with them trading lower, the nervousness spilled on to India as well,' said Gaurang Shah of Geojit Financial Services.

'December is usually a month when foreign funds lock in their profits. As we move on to the new year, they will return to the market. Besides, don't forget the Fed has left open the possibility of another rate cut in January; if it goes for it, liquidity will be further boosted,' Shah added.

The Bombay (OOTC:BBAO) Stock Exchange's benchmark Sensex closed 271.48 points or 1.33 pct lower at 20104.39, while the National Stock Exchange's S&P CNX Nifty lost 1.64 pct to close at 6058.10 points.

However, stocks of companies with lower market capitalisation continued to advance. The BSE's midcap index closed 36.45 points or 0.39 pct higher at 9375.94, while the smallcap index surged 122.34 points or 1.03 pct to close at 12007.33.

Diversified conglomerate ITC Ltd led the Sensex gainers. The stock, called an 'underperformer for long' by a dealer, closed 4.12 pct up at 196.90 rupees on value buying.

Tata Steel (OOTC:TAELF) extended its gains to close almost 3 pct higher at 889.40 rupees, a day after reports said it will invest up to 2 bln usd to build an iron ore mine in Ivory Coast.

GSM player Bharti Airtel was the biggest blue-chip loser, down 6.24 pct at 987.80 rupees as investors took profits from the scrip's recent good runs.

ICICI Bank (NYSE:IBN) also declined on profit taking, closing 3.7 pct lower at 1242.50 rupees. Media reports quoted its chief KV Kamath saying it is too early to comment whether ICICI Bank will review its rates after the recent Fed rate cut.