Indian shares pull back from big early losses

Bangalore: Indian shares recovered from sharp early losses to finish down 0.45 per cent on Monday, after investors covered their short positions in financial issues on hopes interest rates would hold in the near term.

Traders said a drop in annual inflation in mid-August and a sharply lower economic growth in the June quarter would likely discourage the central bank from raising rates, although price pressures continue to be a worry.

Shares in top lender State Bank of India ended up 0.9 per cent at Rs1,416, after falling as much as 3.1 per cent during trade.

No 2 ICICI Bank pulled back from a 3.2 percent slide to close down 1 per cent at Rs664.55.

"Most of the negatives have already been built into the banking stocks and they have the potential to surprise on the positive side," said Amitabh Chakraborty, president of equities at Religare Securities.

The 30-share BSE index closed 66.02 points lower at 14,498.51, with 18 components falling.

The benchmark, which had rallied 3.7 per cent on Friday, fell as much as 1.95 per cent during trade. It is down 28.5 per cent this year, on diminishing growth outlook for the economy.

Traders said a fall in oil prices to below $115 a barrel by 1140 GMT was good for India.

High energy prices have been a key factor behind inflation soaring to double-digits this year.

Annual inflation in mid-August eased to 12.4 percent, below 12.6 percent a week earlier, data showed last week as prices of some raw materials and fuels fell but analysts saw it heading up to peak in December due to pressures in manufacturing, food and minerals.