Indian shares fell for a third consecutive session on Friday, as rising oil prices and concerns over a widening fiscal deficit prompted investors to book some profits ahead of the weekend.
With India Inc. pitching for a 25-50 basis points cut in interest rates, Planning Commission Deputy Chairman Montek Singh Ahluwalia today said any move by the Reserve Bank of India to loosen its monetary policy stance would mainly depend on the government's ability to contain fiscal deficit.
Also, with world oil prices jumping to new nine-month highs, the broadening of inflation pressures could limit the scope for further monetary easing.
Brent crude prices were last trading near $124 a barrel and crude futures for April delivery were up half a percent at $108.34 a barrel, driven higher by escalating tension between Iran and the West and a weakening dollar.
Posting its first weekly fall in eight weeks, the benchmark 30-share Sensex finished the day down 155 points or 0.86 percent at 17,924 while the 50-share Nifty index lost a percent. The BSE mid-cap and small-cap indexes ended down 0.6 percent and 0.7 percent, respectively.
Lenders bore the brunt of the selling as investors scaled back expectations for a rate cut in April. ICICI Bank, Canara Bank, Bank of Baroda, HDFC Bank, Axis Bank and Punjab National Bank fell 1-4 percent.
SBI lost 2.4 percent after the state-run lender priced a preferential share issue to the government at a discount. HDFC tumbled 3.5 percent as Citigroup Inc reportedly offloaded its entire 9.9 percent stake in the mortgage lender via a block deal.
Among other prominent decliners, engineering & construction major Larsen & Toubro lost 3.6 percent, property developer DLF shed 3.2 percent and power equipment maker BHEL declined 2.6 percent.
Reliance Industries ended down 2.1 percent on reports the energy giant plans to raise up to $500 million by selling bonds to overseas investors.
Tata Motors led the decliners in the auto pack, falling 1.1 percent, while software services exporter Wipro lost 0.8 percent and drugmaker Cipla ended down 0.7 percent.
Tata Steel rose 0.9 percent after it sought shareholder nod to increase its borrowing limit. Bharti Airtel added 1.2 percent after dismissing reports about Econet Wireless filing a suit against the company over the ownership of its subsidiary Airtel Nigeria. Coal India gained 1.4 percent, Tata Power advanced 1.5 percent and Sterlite Industries jumped 3.2 percent.
Mangalore Chemicals soared over 10 percent on buyout reports. Shasun Pharmaceuticals climbed 8.3 percent ahead of a board meet on Monday to consider a preferential share issue to private equity investors.
DB Realty plunged 7.1 percent, extending losses for the third straight session. Abu Dhabi-based Etisalat said it had launched legal proceedings against its Indian joint venture partners for fraud and misrepresentation in the 2008 allocation of telecom licenses and radio bandwidth.
ABB slumped 5.5 percent on concerns about falling profitability and poor order inflows. Ranbaxy Laboratories fell 2.6 percent on brokerage downgrades after the drugmaker reported its biggest ever quarterly loss.
On the global front, most Asian stocks edged higher on Friday, with Chinese shares pacing the gains, as buoyant economic data from the United States and Germany suggested that economic momentum is improving.
Growing hopes of further policy easing measures from major central banks and the approval of a massive bond swap by the Greek Parliament that would help wipe 107 billion euros off the country's privately-held debt also overshadowed concerns about the eurozone economy slipping into a recession.
European shares were firmer after a three-day fall, as a couple of solid earnings reports helped shrug off recession worries ahead of a Group of 20 meeting coming up soon in Mexico.
by RTT Staff Writer
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