Indian shares ended modestly lower on Thursday, erasing early gains, as FII outflow fears continued to haunt investors despite a series of measures announced by the Reserve Bank of India recently to prop up the rupee, which hit a record low of 53.85 against the dollar the previous day.
The battered rupee recovered some lost ground today after the central bank imposed limits on open positions at five times the available limit for rupee trading and tightened norms for utilization of the foreign currency fixed deposit funds in an attempt to check further weakening of the currency.
The RBI also asked all foreign exchange earners, including exporters, to convert 50 percent of their foreign exchange holdings into rupees within two weeks and said that exporters can henceforth access the forex market for buying dollars only after they have utilized the balance in their Export Earnings Foreign Currency (EEFC) accounts.
While these measures helped perk up sentiment in general, analysts said the RBI's role in protecting the rupee's slide is limited, given the current global economic scenario and concerns over India's widening fiscal deficit. A weak trend in European markets after the release of French industrial production data also encouraged investors to move to the sidelines in the late noon deals.
The benchmark 30-share Sensex rose about 200 points early in the session before erasing gains and ending down 59 points or 0.36 percent lower at 16,420, with 20 of its components retreating.
The broader Nifty index fell by 9 points or 0.18 percent to 4,966, while the BSE mid-cap index edged up marginally. Metal and auto stocks paced the declines, while oil/gas and consumer durable stocks saw some buying interest, limiting the downside.
Among the prominent decliners in the Sensex pack, automakers such as Tata Motors, Hero MotoCorp and Maruti Suzuki fell 1-3 percent, metal stocks like Hindalco, Sterlite and Coal India lost 1-2 percent, state-run lender SBI tumbled 2.3 percent and private sector rival ICICI Bank shed 1.1 percent. NTPC declined 1.2 percent after the state-run power producer reported a 7 percent fall in Q4 profit.
Cigarette major ITC lost half a percent on profit taking. The stock soared almost 6 percent in the previous session after the government removed ad valorem tax on cigarettes. Likewise, Ranbaxy Laboratories tumbled 3 percent after gaining sharply yesterday on forecast-beating first-quarter results.
Maruti Suzuki fell 3.2 percent after data from an industry body showed car sales in India rose an annual 3.4 percent in April. Lupin plunged 4 percent as the drugmaker reported a 31 percent drop in its fourth-quarter consolidated net profit. Kingfisher Airlines edged down 0.7 percent after a majority of its pilots refused to operate flights in a protest against non-payment of January salaries.
Vedanta Group firm Cairn India soared 4 percent, snapping five days of declines, even as crude futures fell for a seventh day in New York on the back of higher U.S. inventories, weaker-than-expected Chinese trade data and continued concerns over Europe's political stability.
Elsewhere, other Asian markets turned in a mixed performance, as weak Chinese trade data tempered optimism about Greece receiving its latest package of bailout funds. With Greece moving closer to a snap election and worries mounting over the health of Spanish banks, investors remained largely guarded.
However, the euro steadied near a 3-1/2-month low against the dollar as Spanish yields edged lower and the European Financial Stability Facility board voted for releasing 5.2 billion euros or $6.72 billion in emergency assistance to Greece despite opposition from some member states.
European stocks fluctuated ahead of a Bank of England monetary policy statement and trading in the U.S. futures point to a mixed open on Wall Street.
by RTT Staff Writer
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