Business | Markets
Indian shares decline on inflation worries
Indian shares fell 2.4 per cent on Thursday and snapped a run of five weekly gains, as oil prices rebounded to $117 a barrel rekindling inflation concerns and further monetary tightening.
- Reuters
- Published: 23:01 August 14, 2008
Mumbai: Indian shares fell 2.4 per cent on Thursday and snapped a run of five weekly gains, as oil prices rebounded to $117 a barrel rekindling inflation concerns and further monetary tightening.
A higher-than-expected increase in wages for government employees that will cost $2.6 billion also unnerved investors as it would raise federal borrowing and keep interest rates high, traders said.
The main share index fell 2.9 per cent in the holiday-shortened week, after its best run in 2008 and traders said the outlook remained uncertain with high oil prices and inflation lurking.
Financial stocks such as ICICI Bank and State Bank of India led the fall, while export-focused information technology companies bucked the trend and rose for a second day as the rupee weakened to a four-week low.
"Oil seems reversed and there is a possibility of a further price rise. And a long weekend forced investors to close out positions," said Amitabh Chakraborty, president of equities at Religare Securities.
Indian markets are closed today for Independence Day.
Foreign funds, which have sold shares worth about $6.7 billion this year, were edgy after the capital market regulator did not take a decision on norms for unwinding of derivative investment instruments used by them.
The 30-share BSE index ended down 2.44 per cent, or 368.94 points, at 14,724.18, with 23 components falling. It has dropped for three straight days, taking losses this year to 27.4 per cent.
Top listed firm Reliance Industries ended 2.8 per cent lower at Rs2,275.30, its lowest in a week, on concerns about falling gasoline prices and growing losses in producing the fuel as prospects of sustained global supply glut looms.
ICICI Bank fell 5.3 per cent to Rs673.25, its lowest close in almost two weeks and State Bank of India dropped 6.2 per cent to Rs1,458.20.
The broader 50-share NSE index fell 2.2 per cent to 4,430.70.
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