BSE Sensex at 6-week closing low on growth concerns

By Ami Shah

MUMBAI |
Tue Aug 2, 2011 4:23pm IST

MUMBAI (Reuters) – The BSE Sensex fell more than 1 percent on Tuesday to their lowest close in nearly six weeks, as renewed worries about the health of the global economy and local concerns on rising borrowing costs rattled investors.

Financials dropped the most as slowing economic growth was seen dampening demand for loans.

“The desire for exposure to India is muted for the moment. Caution is the word. It is hard to form a concrete view,” said Shankar Char, vice-president and head of sales trading at ICICI Securities.

Asia’s third-largest economy showed further signs of slowdown on Monday, when a survey showed July factory expansion the weakest in 20 months, while a top government panel cut its growth forecasts for the current fiscal year.

Private-sector economists expect a sharper slowdown after the central bank raised interest rates last week, for the 11th time since March 2010.

Morgan Stanley became the latest bank to cut its outlook for on Asia’s second-fastest growing major economy, predicting 2011/12 growth at 7.2 percent from 7.7 percent earlier.

The 30-share BSE main index shed 1.12 percent or 204.44 points to 18,109.89, its lowest close since June 23. Twenty-three of its components lost ground.

The benchmark is down more than 11 percent year-to-date and has underperformed its emerging market peers and world equities in 2011.

“There are concerns on domestic front as well as global front,” Char said. “People are opting for safer bets such as gold.”

Foreign funds’ interest wavered in the second half of July, paring net inflows over the past five weeks to $2.8 billion.

Leading lenders State Bank of India ICICI Bank and HDFC Bank dropped between 1.1 percent and 2.9 percent.

Export-focused software firms fell following sluggish manufacturing data from the United States, their largest market.

Sector leader Tata Consultancy Services shed 0.4 percent while smaller rivals Infosys and Wipro fell 2.3 percent and 2.2 percent respectively.

The 50-share NSE index shed 1.1 percent to 5,456.55.

In the broader market, there were more than three losers for every share that gained.

Around 503 million shares were dealt on the NSE, lower than the 90-day daily average volume of 588 million shares.

MSCI world equity index was down 0.7 percent by 1004 GMT, while emerging equities slipped 1.2 percent.

STOCKS THAT MOVED

* Metal producers dropped as prices fell in world markets on concerns about demand growth after data showed weaker manufacturing activity in top consumers China and the United States.

* Sterlite Industries, Hindalco and Tata Steel shed between 1. 6 percent and 2.5 percent.

* Indraprastha Gas climbed 2.9 percent to 424.30 rupees after Deutsche Bank raised the target price on the liquefied natural gas distributor to 440 rupees from 405 rupees and retained ‘buy’ rating.

(Editing by Ranjit Gangadharan)

Article source: http://feeds.reuters.com/~r/reuters/INbusinessNews/~3/3kp_s7T8XCE/idINIndia-58577420110802

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