Indian shares hit as rupee slumps to record low; foreign flows key

Wed Jun 26, 2013 4:50pm IST

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* BSE index falls 0.41 pct; NSE ends 0.36 pct lower
    * Bharti Airtel falls; regulatory concerns resurface
    * Reliance Capital partners with Japanese firms for banking
licence

    By Abhishek Vishnoi
    MUMBAI, June 26 (Reuters) - Indian shares fell on Wednesday
as blue chips such as Tata Motors declined after the rupee
slumped to a record low, escalating worries foreign investors
may exacerbate outflows and dimming chances of a rate cut by the
Rerserve Bank of India.
    The rupee breaching the key psychological level of
60 to the dollar has worsened fears about the country's current
account deficit and complicated the task for policy makers
looking to revive an economy that grew at its slowest in a
decade in 2012/13.
    The falls in the rupee also led to a slump in bond prices
, indicating receding bets the central bank would
cut interest rates in a country still faced with the prospect of
losing its investment-grade rating.
    In recent months, the reform process has sputtered, taking
some of the shine off India for investors, with FIIs selling
shares worth 105.50 billion rupees ($1.77 billion) in 11
consecutive sessions to Monday.
    "Continued weakness in the rupee and FIIs selling in
equities is creating a negative mood in the market, as investors
are apparently selling on every rally," said Rakesh Goyal,
senior vice president at Bonanza Portfolio Ltd.
    The benchmark BSE index fell 0.41 percent, or 77.03
points, to end at 18,552.12, ending near its lowest close in 2
months, hit on Monday.
    The broader NSE index fell 0.36 percent, or 20.40
points, to end at 5,588.70, closing below the psychologically
important 5,600 level.
    Blue chips hit by the rupee slump include Tata Motors Ltd
 which fell 3.1 percent and Larsen and Toubro Ltd
 that ended 1.1 percent lower.
    Among lenders, HDFC Bank Ltd declined 1.8 percent
while ICICI Bank Ltd fell 0.7 percent.
    Bharti Airtel Ltd fell 6 percent as regulatory
concerns resurfaced ahead of a ministerial panel meeting on
mobile spectrum auction later in the day. 
    Jeweller Gitanjali Gems Ltd slumped 9.99 percent,
hitting its daily lower limit for a third consecutive day, on
fears the government would unveil more curbs to restrict the
supply of gold. The stock's three-day fall wiped out 19.54
billion rupees ($327.36 million), or half of its market
capitalisation. 
    Another jewellery maker, Rajesh Exports, fell 1.6
percent after its chairman told Reuters the company expects
sales and earnings to grow at 10 percent in the current
financial year to March, sharply slower than expected earlier,
because of government measures to curtail gold imports.
 
    India's Bajaj Auto fell 0.7 percent after it said
it expects output at one of its plants in western India to drop
by a third in June and July due to an employee strike that began
on Tuesday. 
    Among stocks that gained, Reliance Capital Ltd 
rose 2.2 percent after company said it would apply for a license
to enter mainstream banking in the country in partnership with
Japan's Sumitomo Mitsui Trust Bank and Nippon Life
Insurance of Japan. 
    
    For additional stocks on the move double click       
     
   FACTORS TO WATCH                                             
* Euro falls to three-week low vs dollar                  
* Brent slips as US data backs Fed stimulus cut strategy   
* Soothing c.bank talk steadies shares               
* 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 Anupama Dwivedi)
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