* Sensex meets resistance; slowing econ outlook weighs * State Bank up; govt to pump in up to $1.6 bln * ITC, L&T, Tata Motors drop * Cbank comments provide no comfort on rates (Updates to close) By Kaustubh Kulkarni MUMBAI, Oct 13 (Reuters) – Indian shares dropped 0.4 percent in choppy trading on Thursday as worries about slowing economic growth and sluggish consumer spending weighed on firms such as cigarette-to-hotels group ITC and engineering conglomerate Larsen & Toubro . Lenders, however, climbed on hopes government moves to shore up the capital of state-run banks would help ease concerns about their outlook. Export-driven software services bellwether Infosys added another 0.65 percent, a day after it had jumped 7 percent following a less-than-expected cut in full-year sales forecast and strong quarterly earnings. Bigger rival Tata Consultancy Services closed up 1.3 percent, while No. 3 software firm Wipro dropped 0.3 percent. The main 30-share BSE index closed down 0.44 percent, or 74.47 points, at 16,883.92, after initially rising 0.7 percent and then falling as much as 0.6 percent.
Traders said there was resistance after the index had climbed to its highest close in more than three weeks in the previous session.
Shares in State Bank of India , the country’s top lender, climbed 0.8 percent on plans by the government to pump in cash to shore up the capital of the state-run bank.
The government will inject 45 billion to 80 billion rupees ($919.7 million to $1.6 billion) into the bank by March 2012, D.K. Mittal, secretary of financial services, said.
The bank, which accounts for one quarter of lending in India, has been reeling under higher provisions for bad loans and lower profits in the last two quarters.
Last week, ratings agency Moody’s had downgraded SBI’s standalone rating to D+ from C- on a scale of A to E, citing low Tier 1 capital, its recent failure to raise capital and worsening asset quality.
Rivals ICICI Bank rose 2.3 percent and HDFC Bank gained 0.75 percent. K.K. Mital, head of portfolio management at Globe Capital, said bank stocks had slumped too much and were again looking attractive for investment. The banking index ended up 1.04 percent, trimming the fall in the year to date to 17.95 percent, compared with a 17.6 percent drop in the main index. Investor confidence about the outlook for companies were dented by comments of the central bank governor, traders said. Speaking after the central bank board meeting in the north-western city of Jaipur, Duvvuri Subbarao reiterated the Reserve Bank of India’s (RBI) stance of trying to contain inflation even at the cost of some short-term economic growth. “We are aware that some central banks in Asia and some outside Asia have reversed (tight policy). Those circumstances are quite different from ours,” he said. The RBI, which has raised rates a dozen times since mid-March 2010, is set to review policy on Oct. 25. “When inflation runs as high as 9.8 percent, it is difficult to bring it down without compromising on growth. So we are trying to trade-off at this time on bringing down inflation even if it means bringing down growth,” Subbarao said. Jindal Steel and Power fell 3.4 percent while miner Coal India and aluminium maker Hindalco fell 1.75 and 2.8 percent respectively. Larsen & Toubro shed 1.7 percent and ITC lost 1 percent. Energy major Reliance Industries closed down 0.3 percent, ahead of its quarterly earnings on Saturday. Refining margins, a key indicator to the company’s profitability, would be watched amid the strong global crude oil prices in July-September. Leading car maker Maruti Suzuki fell 2.5 percent, while truck and car maker Tata Motors dropped 2.7 percent. The 50-share NSE index lost 0.4 percent to 5,077.85 points. In the broader market, there were 729 losers against 686 gainers on moderate volume of 622.1 million shares. Asian shares rose on growing hopes that Europe was taking serious measures to curb the region’s debt woes. The MSCI’s broadest index of Asia Pacific shares outside Japan was up 1.2 percent while Japan’s Nikkei