Thursday, 20 November 2008

BSE Sensex falls to lowest close in 3 years

MUMBAI (Reuters) – The BSE Sensex fell 3.7 percent on Thursday to its lowest close in more than three years, as jittery investors crammed the exit as a broad sell-off gripped world markets on a worsening global economy.

The top 30-share BSE index has tumbled nearly a fifth in a seven-session slide, and is poised just 9 percent from its lowest in three years at 7,697.39 touched on Oct. 27.

Reliance Industries, India's most valuable company, led with a 6.6 percent fall. Financial stocks and software exporters also took a hit as the global economic gloom deepened.

"We are in a phase where poison is being assimilated in the market," said Sanjeev Patkar, head of research at Dolat Capital. "People are slowly reconciling that core earnings are undergoing a change."

Heavy selling by foreign funds has been a key factor behind the market's slide. Foreigners have dumped Indian shares worth a net $13.2 billion in 2008.

Patkar said blue-chip stocks such as Reliance, Bharti Airtel, Bharat Heavy Electricals and Larsen & Toubro all favoured by foreign funds have bore the brunt of the sell-off in recent weeks.

The BSE index shed 3.68 percent, or 322.77 points, to 8,451.01, its lowest close since Nov. 10, 2005. The benchmark has lost 58.3 percent this year, making it one of the worst performers in Asia.

Twenty-five of its components fell, while in the broader market losers led gainers 1,907 to 597 on light volume of 221 million shares.

The 50-share NSE index fell 3.11 percent at 2,553.15.

Falling inflation also failed to halt the slide. The annual inflation rate eased slightly to a 5-½ month low of 8.90 percent, adding to expectations the Reserve Bank would aggressively lower interest rates.

Export-driven software firms lost ground as the slowdown in key U.S. and European markets raised revenue concerns.

Tata Consultancy Services fell 2.4 percent, Infosys Technologies fell 3.8 percent and Wipro lost 1.3 percent.

Private-sector lenders ICICI Bank and HDFC Bank fell 7.9 percent and 7.3 percent respectively, while mortgage lender Housing Development Finance Corp lost 5.6 percent on worries a slowing economy could trigger higher defaults by their customers.

"The current economic situation -- both globally and on the domestic front -- hint to an increase of NPAs (non-performing assets) and slippage ratio for banks," said Amitabh Chakraborty, president for equities at Religare Securities.

Goldman Sachs said in a note to clients slower loan growth, lower margins and rising credit costs would likely affect growth prospects of banks.

However, State Bank of India, the country's largest lender, rose 1.2 percent to 1,092.55 rupees on late buying by some funds, traders said.


* Financial services firm India Infoline rose 4 percent to 40.35 rupees after it said its board would consider a share buyback on Nov. 28.

* Hindustan Copper Ltd, India's third-biggest producer of the metal, fell 7.8 percent to 80.40 rupees after a senior official said it expected a 10 percent drop in production in 2008/09, and margins were under pressure from falling prices.

* Indiabulls Financial Services fell by its daily limit of 5 percent to 90.45 rupees on media reports the firm had put on hold expansion plans and slowed lending to small and medium-sized businesses as credit dried up.


* GVK Power & Infrastructure on 17.8 million shares

* Suzlon Energy on 8.9 million shares

* Reliance Petroleum on 8.7 million shares


* For technical analysis double click on

* India rupee weaker but cbank hand helps limit fall [INR/]

* Indian bond yields ease on rate view, low inflation [IN/]

* FOREX-Euro hits 1-week low vs yen, dlr, stocks struggle


* GLOBAL MARKETS-World shares at 5-½ year lows on economy

fears [MKTS/GLOB]

* Oil down a dollar as crisis crimps growth [O/R]

* US STOCKS-US stock index futures signal more pain on Thurs


* For closing rates of Indian ADRs

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