Indian shares fell on Tuesday, erasing early gains, as the retreat in the rupee despite RBI's latest measures to curb speculation in the currency futures market sparked fears of fresh capital outflows.
After a brief rebound in the morning session, the rupee was last trading down at a record low of 55.34 versus the dollar, increasing calls for special foreign exchange bonds to be sold by the government to stop the rupee's drop in spot markets.
The benchmark 30-share Sensex remained comfortably in positive territory until early afternoon, as growing hopes that Europe would embark on fresh action to bolster growth supported risk sentiment. However, with the rupee resuming its downward journey, the benchmark index gave up all its early gains to end down 157 points or 0.97 percent at 16,026. The broader Nifty index fell by 46 points or 0.93 percent to 4,860.
The BSE mid-cap and small-cap indexes posted relatively modest losses and the market breadth was fairly negative, with declining shares outpacing gaining ones by 1565 to 1083 shares on the BSE. Heavyweight metal and banking shares bore the brunt of the selling, while IT and healthcare stocks saw stock-specific buying amid the rupee falling to a record low.
SBI, India's largest lender, tumbled 3.4 percent, while private sector rival ICICI Bank lost 1.2 percent and HDFC Bank ended down 1.7 percent.
Carmaker Maruti Suzuki slumped 4.5 percent on concerns that its royalty payments and cost of imports will increase due to rupee slide. Mahindra & Mahindra ended 1.4 percent lower, Bajaj Auto lost a percent and Hero MotoCorp slipped half a percent.
Tata Power plummeted 5.3 percent on speculation it may report a consolidated loss in the fourth quarter. Metal stocks like Sterlite and Hindalco tumbled 3-4 percent, drugmaker Sun Pharma fell 3 percent, engineering & construction giant Larsen & Toubro shed 2.2 percent and property developer DLF ended down 1.9 percent.
Tata Communications slipped 0.8 percent as the company reported consolidated net loss of Rs 260.94 crore for the fourth quarter ended March. Wipro ended little changed with a negative bias amid reports that it is aggressively looking at acquisitions worth $50- $300 million to help boost profit.
Thomas Cook India rose 2.4 percent after Canada's Fairfax Financial Holdings said it would buy Thomas Cook Group Plc's 77 percent stake in its India operations for about $150 million.
State-run oil retailers BPCL, HPCL and IOC posted modest gains on reports the government will provide Rs.38,500 crore as additional cash subsidy to public sector oil companies as part of compensation for selling diesel, LPG and kerosene below cost last financial year.
Elsewhere, other Asian markets rebounded from their multi-month lows, with key benchmark indexes in Hong Kong, Japan, China, Australia and South Korea rising between 0.6 percent and 1.6 percent, thanks to firmer cues from Wall Street and Europe overnight.
European shares also traded firm in early trading on speculation that Europe and China will do more to bolster flagging economic growth.
Investors anticipate that the May 23 EU leaders' summit will see proposals to tackle the region's worsening debt crisis after France's new finance minister and his German counterpart vowed their support for Greece to stay in the 17-nation euro and the monetary union.
In China, a government funded publication said the government will fast-track its approval of infrastructure investments to support growth, underlining a call by Premier Wen Jiabao over the weekend for greater efforts to support a transition in the world's second-largest economy.
Meanwhile, the Japanese yen weakened sharply late Tuesday after Fitch downgraded the nation's credit rating by two notches, citing its massive public debt.
by RTT Staff Writer
For comments and feedback: email@example.com