Indian shares close at lowest in 2 months; federal budget key

Fri Feb 22, 2013 4:44pm IST

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Stocks

   

* BSE index falls 0.04 pct; NSE ends 0.03 pct lower
    * Goldman Sachs downgrades HDFC to 'sell' from 'neutral'
    * Sun Pharma gains on higher prices for drugs

    By Abhishek Vishnoi
    MUMBAI, Feb 22 (Reuters) - Indian shares fell for a second
session on Friday to their lowest close in two months, led by
declines in HDFC after Goldman Sachs downgraded the stock to
"sell", while ITC fell on fears of a hike in excise duty for
tobacco in the upcoming federal budget.
    Shares are expected to be range-bound ahead of the 2013/14
budget, to be unveiled on Feb. 28, and investors will watch
whether the finance minister will manage to impose fiscal
discipline even as the government tries to revive growth.
    India has targeted a fiscal deficit of 4.8 percent of gross
domestic product for the year starting in April, but budget
details will also be key given an austerity push could add to
inflationary pressures, hampering chances for rapid interest
rate cuts.    
    Global risk factors will also be key given domestic shares
on Thursday posted their biggest fall since July on worries
about whether the U.S. Federal Reserve will continue its bond
buying programme. 
    "One should closes watch how the finance misister balances
populist and pragmatic expectations, especially that on fiscal
consolidation," said Vijay Kedia, director at private wealth
management firm Kedia Securities.
    Announcements have to turn into action otherwise global risk
aversion might lead to redemptions even at FII desks, Kedia
added.
    The benchmark BSE index fell 0.04 percent, or 8.35
points, to end at 19,317.01, after falling 0.77 percent for the
week, marking a fourth week of falls.
    The broader NSE index fell 0.03 percent, or 1.95
points, to end at 5,850.30, also ending 0.63 percent lower for
the week.
    Housing Development Finance Corp Ltd fell 1.9
percent, its biggest single day fall since Jan. 11, after
Goldman Sachs cut its rating on to "sell" from "neutral", on
expectations that Asia's third-largest economy would recover at
a "modest" pace and the prospect of rising competition.
 
    ITC Ltd fell 1.6 percent, marking a third day of
losses, on continued fears of a hike in excise duty in the
upcoming budget, as the government aims to increase its tax
collections to offset some of its revenue shortfall.
    Jet Airways fell 5.7 percent on continued concerns
about whether the carrier will clinch a stake sale to Abu
Dhabi-based carrier Etihad Airways. Shares have fallen 14.5
percent for the week - their biggest weekly loss since August
28, 2012.  
    Aviation stocks including Spicejet also fell on
concerns of increased competition after Malaysia's AirAsia Bhd
, Asia's largest budget carrier, on Wednesday announced
plans to launch a regional airline in India in a venture with
the Tata group. 
    Spicejet fell 2.25 percent while Kingfisher
Airlines ended 3 percent higher on hopes that its
controlling stakeholder United Breweries Holdings Ltd 
will lend to the ailing carrier. 
    Among other stocks that gained, Sun Pharmaceutical
Industries rose 1.8 percent after Credit Suisse said
the drug maker's subsidiary Taro Pharmaceutical Industries
 has pushed through price increases in three products
last week, citing industry checks. 
    Infosys gained 1.2 percent, while Tata Consultancy
Services ended 0.3 percent higher on hopes of
incentives for exporters in the budget. 
    
   For additional stocks on the move double click        
     
   FACTORS TO WATCH                                             
* Euro hits session high on German data, stays vulnerable 
* Brent crude oil rebounds more than $1 after losses       
* European shares, euro rebound from steep losses    
* Foreign institutional investor flows          
* For closing rates of Indian ADRs                       
                       
   ASIA-PACIFIC STOCK MARKETS:                                  
Pan-Asia........ Japan.......   S.Korea... 
S.E. Asia.......        Hong Kong...  Taiwan.... 
Australia/NZ....        India.......  China..... 
                        
   OTHER MARKETS:                                               
Wall Street ....         Gold ....... Currency.. 
Eurostocks.....         Oil ........  JP bonds... 
ADR Report .....       LME metals. US bonds.. 
Stocks News US.. Stocks News Europe     
                       
   DIARIES & DATA:                                              
Indian Data Watch   Asia earnings diary 
U.S. earnings diary     European diary       
Indian diary          Wall Street Week Ahead  
Eurostocks Week Ahead                                   
                         
   TOP NEWS:                                                    
   For top Asian company news, double click on:       
   U.S. company news  European company news  
   Forex news        Global Economy news  
   Technology news  Telecoms news        
   Media news       Banking news           
   Politics/General    Asia Macro data      <ECONASIA 

 (Editing by Sunil Nair)
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