Indian shares tumbled on Monday, tracking extremely weak Asian and European cues, as concerns that the European debt crisis is worsening dented investor sentiment. Domestic concerns over whether or not the government will initiate fresh reform initiatives also kept investors on edge ahead of a Cabinet reshuffle expected over the next fortnight.
Political uncertainty intensified today after reports said Sharad Pawar's Nationalist Congress Party will decide today on its continuance in the Congress-led United Progressive Alliance government at the Centre. The rupee fell more than a percent towards the 56 level, with a weak euro in the overseas markets and month-end demand for dollars weighing on the currency.
The benchmark 30-share Sensex ended the session down about 280 points or 1.64 percent near its day's low at 16,877, while the broader Nifty index fell by 87 points or 1.67 percent to 5,118. Automakers, banks, metal producers and information technology companies bore the brunt of the selling, while energy and healthcare stocks witnessed stock-specific buying.
Metal stocks came under heavy selling pressure as commodities tumbled on worries about the outlook for the global economy. Hindalco, Tata Steel, Sesa Goa and Sterlite fell 4-5 percent.
Shares of Maruti Suzuki plunged 5.8 percent after violence at its Manesar plant last week resulted in a lockout. Tata Motors fell 3.5 percent, Mahindra & Mahindra declined 1.4 percent, Hero MotoCorp eased 1.3 percent and Bajaj Auto ended down 2.1 percent.
Retailers such as Trent, Shoppers Stop and Pantaloon fell 2-9 percent after the Samajwadi Party joined hands with Left parties and the Trinamool Congress in opposing multi-brand retail.
Reliance Industries edged down 0.7 percent despite reporting forecast-beating Q1 earnings. Essar Oil fell 2.5 percent after securing a Rs 5000-crore loan from banks to meet its Rs 8000 crore of sales tax obligations to the Gujarat government.
Larsen & Toubro ended down a percent despite posting a 16 percent rise in quarterly net profit, beating estimates. Crompton Greaves plummeted 9.5 percent on dismal earnings. Reliance Communications retreated 3.3 percent as the company punt on hold the initial public offering of its undersea cable unit Flag Telecom in Singapore, citing adverse market conditions.
FMCG player Hindustan Unilever ended 0.7 percent lower ahead of its quarterly results later today. In the financial sector, HDFC, HDFC Bank, SBI and ICICI Bank fell between 1.3 percent and 2.3 percent.
Software services exporter TCS declined 1.2 percent, rival Infosys dropped 1.1 percent and Wipro shed 2.4 percent. Geometric jumped 9.5 percent after the mid-cap IT firm reported a double digit growth in operating profits for the quarter ended June 2012
Elsewhere, key benchmark indexes in China, Australia, South Korea, Japan and Hong Kong fell between 1.3 percent and 3 percent, as investors fretted about debt woes in Europe and slowing economic expansion in China.
Europe's debt woes intensified after Spain's Valencia and Murcia regions asked for financial aid and Greek Prime Minister Antonis Samaras warned the country is facing economic hard times like that which the U.S. faced in the 1930s. There were also reports that the European Central Bank will stop accepting Greek sovereign bonds as collateral for refinancing operations pending a review by Greece's international lenders tomorrow.
European stocks slumped and the euro hit its lowest level in almost 12 years against the Japanese yen as a jump in Spanish long-term borrowing costs to record highs stoked concerns that Europe's debt crisis is escalating.
by RTT Staff Writer
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