September 28, 2017 / 7:07 AM / 22 days ago

Indian shares recover; rupee slide continues

* NSE index up 0.13 pct, BSE index up 0.28 pct

* All eyes on F&O expiry

By Vishal Sridhar

Sept 28 (Reuters) - Indian shares recovered on Thursday after declining for seven straight sessions, but overall sentiment was muted ahead of the expiry of derivative contracts later in the day and as the rupee continued to weaken against the dollar.

Expectations of further rate hikes by the U.S. Federal Reserve, tensions over North Korea, rising crude prices and worries of widening fiscal deficit on increased government spending to boost a slowing economy dented sentiment.

The rupee came under further pressure on Thursday, hitting as low as 65.8950 per dollar, as the greenback strengthened after strong U.S. economic data added to the case for further interest rate hikes by the Federal Reserve.

”For a day or two, because of F&O expiry, some pullback is possible. But the short term (trend) looks down due to bigger problems like dollar appreciation and rising crude prices, while lower exports and possibility of higher fiscal deficit are also adding to the pressure, said Sumit Pokharna, Deputy Vice President at Kotak Securities.

The broader NSE index edged 0.13 percent higher to 9,748.25 as of 0637 GMT, while the benchmark BSE index was 0.28 percent higher at 31,247.43.

Both indexes had fallen in each of the seven previous sessions, marking their longest losing streak since mid-December. As of Wednesday’s close, the NSE index had fallen about 4 percent since its record high on Sept. 19.

Recent losers recovered, with ITC Ltd gaining 1.4 percent and financial stocks such as Housing Development Finance Corp rising 0.3 percent.

Dr.Reddy’s Laboratories Ltd was among the top gainers on the NSE index, rising as much as 4.1 percent after the drugmaker’s plant in Andhra Pradesh got U.S. FDA’s permission for exports.

Shares of state-owned firms such as Indian Oil Corp Ltd and GAIL (India) Ltd fell as much as 5.35 pct and 3.16 pct, respectively, after explorer Oil and Natural Gas Corp Ltd said on Wednesday that it may consider selling its stake in the companies. (Reporting by Vishal Sridhar in Bengaluru; Editing by Vyas Mohan)

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