Indian shares fell sharply on Monday after data showed India's trade deficit widened in April to $17.8 billion from $14 billion last year due to a massive surge in gold imports, as retail consumers took advantage of lower prices to buy more gold.
Gold and silver imports rose by 138 percent to $7.5 billion last month year-over-year, highlighting worries about India's current account deficit and offsetting optimism over a downtrend in consumer inflation. India's annual consumer inflation fell for the second straight month in April due to easing of prices of vegetables, edible oil and protein-based items, government data showed today. Consumer prices rose an annual 9.30 percent in April versus 10.39 percent in March.
Weak global cues and a sharp fall in the rupee to a more than two-month low also prompted traders to take some profits off the table after benchmark indexes Sensex and Nifty closed at their 28-month high during a special trading session on Saturday.
The benchmark BSE Sensex fell 431 points or 2.14 percent to 19,692, with all 30 of its components ending in the red. The broader Nifty index fell 127 points or 2.08 percent to 5,980. Investors now await wholesale price inflation data due out tomorrow for clues to further cuts in policy rates.
Cigarette manufacturer ITC plunged over 5 percent on profit taking after reaching a record high on Saturday. Reliance Infrastructure followed suit with a 5 percent loss, while IndusInd Bank, BHEL, Jaiprakash Associates, Larsen & Toubro, Sesa Goa, Tata Motors, Tata Steel and Bharti Airtel lost 3-4 percent.
Realty firm DLF retreated 2.6 percent ahead of a share sale to institutional investors on 14th. Bank of India slumped 4.7 percent after the state-owned lender reported a 21 percent fall in fourth-quarter net profit, dented by higher provisions. Rivals Dena Bank and Bank of India as well as JK Cement fell 4-7 percent on disappointing results.
New Delhi Television declined 5.9 percent on profit taking after rallying more than 30 percent in the previous two trading sessions on the back of turnaround Q4 results.
Ashok Leyland lost 1.6 percent as the commercial vehicle manufacturer announced an organizational rejig by which it will create three different divisions. Dr.Reddy's Laboratories hit a record high before erasing early gains to end half a percent lower ahead of its Q4 earnings due out tomorrow.
Shares of jewelry manufacturers reversed sharp initial gains to end mostly lower as consumers thronged jewelry outlets across the country to purchase gold on the auspicious occasion of Akshaya Tritiya.
On the global front, other Asian markets ended mostly lower after mixed data out of China underscored the fragility of the country's economic recovery. The weakening of the commodity prices due to the strength of the dollar, which is benefiting from strong U.S. data, and speculation that the Federal Reserve is mulling reducing the amount of bonds that it buys to stimulate the economy also weakened investor appetite for riskier assets.
Japanese shares rallied, helped by the dollar's continued ascent and strong results from companies like Nissan Motor and TDK. The benchmark Nikkei average rose 1.2 percent to its highest level since January 2008.
European stocks were modestly lower in early trading as traders remained wary ahead of the U.S. retail sales data and a meeting of Eurozone finance ministers in Brussels later today that will discuss review programs for Spain and Cyprus.
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