India's main index plunges to five-month low

Mumbai: Indian shares fell to a five-month low yesterday before paring some losses to end down 0.90 per cent after a rise in inflation spooked investors already unnerved by recent market turmoil.

India's annual inflation rate rose to 6.46 per cent as at March 3, heading back towards two-year highs hit last month and raising the prospect of central bank action to contain price pressures.

The 30-issue BSE index closed 113.45 points down at 12,430.40, with 25 of its components losing ground, after hitting a five-month low of 12,316.10 during trade.

The index ended just above its lowest close so far in 2007 of 12,415.04 on March 5. It was down 3.5 per cent on the week and is 15.6 per cent below its record high hit on February 9.

"A down week could mean further weakness in the early part of (this) week," said Deepak Jasani, head of retail research at HDFC Securities.

"Volumes will start dwindling. Only compulsive traders and investors will come to the market and the rest all will take a break ahead of the financial year-end," he said.

Further fall likely

India's financial year ends on March 31.

Sandeep Wagle, chief technical analyst at Angel Broking said the benchmark index was likely to head towards 11,700.

"It could even go up from these levels, but will fall again," he said.

The index had slipped below its 200-day moving average, an important technical support level, during trade but managed to close about 70 points above it.

Leading the index down were bellwether Infosys Technologies with a fall of 1.5 per cent and engineering firm Larsen & Toubro Ltd with a 3 per cent fall.

Top private firm Reliance Industries bucked the trend to gain 1.3 per cent on a newspaper report it was close to signing a deal for a 59 per cent stake in a $20 billion joint venture with US-based Dow Chemical Co.

In the broader market, 1,740 losers beat 798 gainers on volume of 159.4 million shares.

The 50-issue NSE index fell 0.96 per cent to 3,608.55.

Ranbaxy Laboratories Ltd rose 1.6 per cent to Rs316.05 after it said it had received tentative approval from the US Food and Drug Administration to make and market zolpidem tartrate tablets, used to treat insomnia.

Television broadcaster Raj Television Network Ltd and apparel maker Page Industries Ltd, which made their debut yesterday, closed below their issue price.

Raj Television closed at Rs225.95 compared with an issue price of Rs257, while Page Industries closed at Rs282.10 against its issue price of Rs360.

Pritish Nandy Communications Ltd rose 6 per cent to Rs50 after it said it would issue 4 million shares at Rs70 each to qualified institutional buyers.