WSJ:Indian Shares End Down; Rupee Worries, Europe Debt Woes Hurt
MUMBAI (Dow Jones)--Indian shares ended lower Thursday, failing to hold on to their early gains, as investors sold on fresh worries over the local currency and the European debt crisis.
Shares gained in early trade after the Reserve Bank of India imposed foreign-exchange restrictions on companies and tightened trading rules for banks in a bid to halt a sharp slide in the rupee.
The Bombay Stock Exchange's 30-stock Sensitive Index slipped 59.53 points, or 0.4%, to end at 16,420.05, its lowest finish since Jan. 16. The index traded between 16,377.02 and 16,671.81.
The National Stock Exchange's 50-stock Nifty declined 9.10 points, or 0.2%, to close at 4,965.70.
Trading volume in the BSE's cash segment fell to INR18.95 billion from Wednesday's INR20.14 billion. Decliners outnumbered gainers 1,524 to 1,239, while 145 shares remained unchanged.
"Investors' sentiment is weak because of the high volatility in the currency market and the worsening European situation," said P.S. Balasubramanian, head of institutional business at Vertex Securities.
Balasubramanian said that investors are likely to continue selling shares at every gain until there is an end to the European crisis and until local companies start showing better results.
India's corporate profits have grown 8% over the past four years, compared with the 21% rise in the last 10-year period, due to a fall in profit margins caused by lack of pricing power, said a Morgan Stanley study. "The investment rate has dropped and the current deficit has widened to the detriment of profit margin," it said.
Bank shares fell on increasing worries about profitability as provisions for bad loans are rising at most lenders.
State Bank of India slid 2.3% to INR1,843.75, while ICICI Bank (532174.BY) closed 1.1% lower at INR812.80.
Auto stocks fell after data showed car sales in India grew 3.4% from a year earlier in April, the slowest pace in 10 months, as costly loans, higher fuel prices and a rise in vehicle prices deterred buyers.
Maruti Suzuki slipped 3.2% at INR1,260.50, and Tata Motors ended down 1.1% at INR289.70. Hero MotoCorp fell 1.5% to INR1,842.85, while Bajaj Auto was down 0.6% at INR1,502.90.
-By Raghavendra Upadhyaya; Dow Jones Newswires; 91 22 61456103; raghavendra.upadhyaya@dowjones.com
