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Indian shares pare losses to 2 pct as banks recover (Reuters)
2008.10.16By Sumeet Chatterjee 25 minutes ago
BANGALORE (Reuters) - Indian shares pared losses to 2.1 percent on Thursday after slumping to their lowest in more than two years in early trade, with lingering fears of a global economic recession keeping investors jittery.
The market tumbled as much as 7.3 percent at one stage before clawing back as U.S. futures pointed to a higher opening on Wall Street, where investors awaited a flurry of U.S. corporate earnings and economic data.
Traders said there was short covering after the main index almost dived below 10,000 points for the first time since July 2006, but the outlook remained downbeat.
"The overall trend is still very uncertain as the primary cues are coming from the international markets," said Jayesh Shroff, fund manager at SBI Mutual Fund.
Energy group Reliance Industries, India's most valuable listed firm, led the losses falling 8 percent to 1,397.25 rupees. Heavy foreign selling took the blue-chip down
12.7 percent to its lowest since April 2007 at one point.
The 30-share BSE index ended down 2.11 percent, or 227.63 points, at 10,581.49, taking losses to 8 percent over two days. Sixteen of the index components lost ground.
The benchmark, which fell as low as 10,017.80, has lost about 48 percent in 2008.
JM Financial Services said the index could head towards 9,900, which was the next big support level.
Financials recovered from an early slide and climbed on hopes the authorities would step up efforts to ease a cash crunch.
"We are monitoring the situation on a continuous basis," central bank governor Duvvuri Subbarao said after a board meeting in the southwestern state of Goa. "We'll continue to monitor the situation and as of now everything is under control."
The central bank has freed up 1 trillion rupees ($20.5 billion) of funds in a series of measures.
Top lender State Bank of India surged 3.1 percent to 1,543.90 rupees, while ICICI Bank ended up 0.2 percent at 415 rupees after initially falling.
In the broader market, losers outpaced gainers two-to-one on volume of 293 million shares.
Annual inflation slowed to 11.44 percent in early October, the lowest rate since the end of May, data showed on Thursday, but traders said investors were looking to world markets for direction.
"The global headwinds are really very strong," said Ambareesh Baliga, vice president at Karvy Stock Broking. "There is a complete lack of confidence in the markets."
Foreign funds, which have sold a net $11.1 billion worth of Indian shares this year, were again heavy sellers, traders said.
Shares in top software services exporter Tata Consultancy Services plunged to 467 rupees, their lowest since listing in August 2004, as concerns grew about the firm's earnings amid the spreading global financial crisis.
The company, which gets bulk of its revenue from banking and financial services clients, reports quarterly earnings on Oct.
22. The stock ended down 8.6 percent at 495.20 rupees.
Infrastructure play Larsen & Toubro tumbled 7.6 percent to 825.75 rupees, its lowest close since April 2007. Brokerage Prabhudas Lilladher on Thursday downgraded the stock to "reduce" on concerns economic slowdown will hit orders.
The broader 50-share NSE index ended down 2.07 percent at 3,269.30, after having fallen 7.1 percent during trade.
STOCKS THAT MOVED
* Hindalco Industries dropped 12.2 percent to 69.75 rupees. India's top aluminium maker said on Thursday it had received subscriptions for 55.97 percent of its 50.5 billion
rupee ($1 billion) rights issue.
The recent fall in Hindalco's share price dented investor interest in the rights issue, which was priced at 96 rupees.
* Biocon closed down 3.3 percent at 125.90 rupees, after the country's largest listed biotechnology company reported a sharp drop in its quarterly net profit due to foreign exchange losses.
MAIN TOP 3 BY VOLUME
* IFCI on 12 million shares
* Chambal Fertilisers & Chemicals on 11.6 million shares
* Reliance Natural Resources on 10.8 million shares
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