Indian shares fell sharply on Thursday, mirroring weak Asian and European cues as investors become anxious about central banks' stimulus policies. Other Asian markets tumbled, with Japan's Nikkei index plunging 6.4 percent to enter a bear market as investors braced for the fallout from the potential effects of QE tapering in the coming months.
The dollar slumped to a 10-week low versus the yen as investors sought safe-haven assets in the face of tumbling stock markets. The markets elsewhere in China, Hong Kong, Indonesia, Malaysia and Taiwan were down 2-3 percent, dampening investor enthusiasm over Fitch's move to upgrade India's sovereign ratings outlook. European stocks were trading lower at a seven-week low, extending losses for a fourth consecutive session.
The rupee was last trading weak at 58.13/14 per dollar, stoking concerns the weakness in rupee and stubborn retail inflation will prevent the Reserve Bank of India from lowering interest rates at its upcoming policy meeting on June 17.
The benchmark BSE Sensex fell by 214 points or 1.12 percent to 18,827, while the broader Nifty index ended at 5,699, down 61 points or 1.06 percent from its previous close.
Finance Minister Palaniappan Chidambaram today said the government will announce several measures in June, including relaxation of FDI caps, coal pricing and gas price revision, to underpin economic growth and contain rupee volatility.
"We have to take long term view of what is happening in India; results have been achieved; looking forward to more reforms," he told reporters in New Delhi. He asked people to not panic over the falling rupee saying the economy is recovering.
Meanwhile, the government revised the industrial output growth rate for April to 2.2 percent from 2 percent released yesterday after factoring in a correction in recording production data for electricity.
Among the prominent decliners in the Nifty pack, Tata Steel, Mahindra & Mahindra, NMDC, Tata Motors, GAIL, Bank of Baroda and PNB retreated 3-5 percent. Sun Pharma tumbled 3.2 percent on settling its ongoing litigation in the U.S. District Court regarding its U.S. subsidiary's generic drug pantoprazole.
Apollo Tyres plunged a whopping 26 percent on worries its debt will rise after the company agreed to buy U.S.-based Cooper Tire & Rubber Company in an all-cash transaction for around Rs 14,500 crore. Jubilant Foodworks slumped 4.2 percent on reports of stake sale by promoter Weston Investments.
Hindalco shares soared 4.7 percent on bargain hunting after recent sharp losses. Bharti Airtel rallied 3.3 percent on short covering after the company said the founders have purchased over 18 lakh shares of the telecom major for around Rs 50 crore via open market operations this week.
Jet Airways jumped 6 percent ahead of a crucial FIPB meeting to discuss the Jet-Etihad deal tomorrow. Titan Industries climbed 4.3 percent on bargain hunting after the stock hit a fresh 52-week low. ILandFS Transportation Networks rallied 3.5 percent on receiving environmental approval for three road projects.
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