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Indian Shares Edge Lower In Late Sell-off

Indian shares fell sharply in the last hour of trading. Reversing early gains, the benchmark Sensex and the broader Nifty index ended the session down about a percent each, dragged down by rate-sensitive realty, banking and auto stocks. Large-cap stocks reversed early gains in the afternoon after RBI Governor D Subbarao said inflation is "still quite high", dampening hopes for an interest rate cut next month.

Meanwhile, ahead of the Winter Session of Parliament, starting next week, the government reached out to opposition parties seeking their support for passage of key economic bills, including amendment to the Insurance Bill, Banking Regulation Amendment Bill and Direct Taxes Code.

Extending recent losses, the BSE Sensex ended the session down 162 points or 0.88 percent at 18,309, with 24 of its components retreating. The broader Nifty index fell by 57 points or 1.1 percent to 5,574, while the BSE mid-cap and small-cap indexes ended down 0.9 percent and 1.1 percent, respectively.

Among the prominent decliners, Tata Motors tumbled 3.3 percent as it posted a modest 6 percent rise in global sales for October. BHEL, ICICI Bank, Cipla, Ambuja Cement, Hindustan Unilever, Kotak Mahindra Bank, DLF, Reliance Infrastructure and IDFC lost 3-4 percent.

GMR Infrastructure declined 1.8 percent on reports it plans to sell off some of its assets in the next 2-3 months. Biocon plunged 5.3 percent after it entered into a pact with Bristol-Myers Squibb Company for its oral insulin drug IN-105.

Jet Airways tumbled 4 percent, reversing early gains amid reports the government may tweak its FDI policy in aviation. Zee Entertainment Enterprises lost 2.5 percent despite receiving an award in its favor holding that BCCI was guilty of breaching its contract with the company.

Telecom stocks turned in a mixed performance after rallying yesterday following the 2G auction failure. Idea Cellular slipped 0.2 percent, Reliance Communication tumbled 4 percent and Tata Teleservices lost 1.3 percent, while Bharti Airtel jumped 3.1 percent.

The government intends to conduct another auction of telecom spectrum before March, Telecom Minister Kapil Sibal said today as the government and the Congress hit back at the Controller and Auditor General of India's estimate of loss to the national exchequer in the 2G spectrum allocation in 2001.

Software services exporter Infosys rose 1.8 percent on a weaker rupee, drug maker Dr Reddy's Laboratories added 1.9 percent and state-run oil explorer ONGC gained 1.2 percent, while Jindal Steel and Coal India ended up about half a percent each.

Mahindra & Mahindra Financial Services rose half a percent as it raised Rs. 867 crore through a share placement to qualified institutional investors. Tata Coffee soared 4 percent, extending the previous session's 20 percent rally.

On the global front, other Asian markets steadied on Friday following recent steep losses, with speculation that the Bank of Japan will boost monetary stimulus underpinning sentiment.

Japan's Nikkei index climbed 2.2 percent following the previous session's 1.9 percent rally after Prime Minister Yoshihiko Noda dissolved the Lower House of Japan's Parliament, paving the way for a general election in December that will likely end the ruling Democrats' three years in power. Shinzo Abe, the leader of the opposing Liberal Democratic Party and favorite for the win, has already called for "unlimited easing" by the Bank of Japan to lift the nation out of deflation. Also, political analysts expect the LDP to be more assertive in dealing with China.

European stocks were broadly lower, extending losses for the third straight session as investors eagerly awaited budget talks in Washington to see if the two sides would move closer to a compromise over deficit reduction.

by RTTNews Staff Writer

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