Indian shares snapped four days of gains on Friday, as renewed concerns over P-notes, the slide in rupee to its weakest level in more than three months against the dollar and no signs of intervention by the Reserve Bank of India weighed on investor sentiment ahead of the weekend.
Meanwhile, UBS today downgraded Indian shares to "neutral" from "overweight" as the investment bank sees no big downside surprises on inflation to warrant aggressive rate cuts. Shares of energy giant Reliance Industries fell 1.4 percent ahead of its quarterly results due after the market close.
The benchmark 30-share Sensex fell as much as 1.5 percent in the afternoon before recouping some of its loss and ending down 130 points or 0.74 percent at 17,374, with 21 of its component retreating.
The broader Nifty index fell by 42 points or 0.78 percent to 5,291, while the BSE mid-cap and small-cap indexes eased 1 percent and 0.5 percent, respectively.
Aluminum producer Hindalco led the decliners in the Sensex pack, losing 2.5 percent, while private power producer Tata Power, state-run oil explorer ONGC, power equipment major BHEL and engineering & construction giant Larsen & Toubro all fell over 2 percent.
Kingfisher Airlines shed 1.3 percent despite receiving DGFT approval to directly import jet fuel. Rival Jet Airways lost 1.3 percent and SpiceJet fell about a percent after the government allowed airlines to raise additional low-cost capital through the ECB route.
State-run lenders such as SBI, PNB, IDBI Bank, and Indian Bank fell between half a percent and 2 percent, as investors remained concerned that lowering interest rates will weigh on their margins.
Shares of private sector lender ICICI Bank fell 2 percent. In an interview to a television channel, Chanda Kochhar, managing director and chief executive officer of ICICI Bank, said that she doesn't see pressure on margins due to the base rate cut.
Maruti Suzuki edged up 0.1 percent, extending recent gains as its recently launched multi-purpose Ertiga car evoked overwhelming response. M&M climbed 2.9 percent on reports that the Union Cabinet has cleared the company's proposal worth Rs. 26 crore to develop radar systems and various kinds of defense electronic systems.
Tata Motors, India's largest automaker, declined 0.8 percent, two-wheeler manufacturer Hero MotoCorp slipped 0.2 percent and Bajaj Auto lost 1.3 percent. Cement major ACC fell 1.7 percent and Ambuja Cements lost 2.5 percent after reporting weak quarterly earnings.
On the global front, other Asian markets ended mostly lower on Friday, as weak U.S. economic data and growing concerns over Spanish debt financing despite a relatively successful bond auction yesterday rendered investor mood cautious. Also, investors looked ahead to the G20 and IMF meet in Washington at the weekend after IMF managing director Christine Lagarde said that supplying more capital directly to European banks could help ease the debt crisis.
China's Shanghai Composite index, however, rallied 1.2 percent on renewed hopes of fiscal and monetary stimulus.
European shares fluctuated before stabilizing on data showing an unexpected improvement in German business sentiment in April. Crude and copper futures gained ground and the euro strengthened against the dollar, as investors cheered Lagarde's comments that Spain is not in need of the fund's support.
by RTT Staff Writer
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