WSJ:Indian Shares End Lower As Rupee Hits Record Low Vs Dollar
MUMBAI (Dow Jones)--Indian shares reversed early gains to close lower Tuesday, as the local currency continued its downward spiral, setting new record lows against the U.S. dollar after Fitch Ratings cut Japan's sovereign rating.
The Bombay Stock Exchange's 30-stock Sensitive Index fell 156.85 points, or 1.0%, to end at 16,026.41, after trading between 16,000.84 and 16,366.72 during the session.
The benchmark index is down nearly 7.8% in the past one month.
The National Stock Exchange's 50-stock Nifty index declined 45.55 points, or 0.9%, to close at 4,860.50.
Trading volume in the BSE's cash segment rose to INR18.32 billion from Monday's INR15.56 billion. Decliners outnumbered advancers 1,568 to 1,081, while 126 stocks remained unchanged.
The Indian rupee fell at a frantic pace Tuesday, setting a new record low of INR55.45 against the dollar, as risk sentiment took a beating after Fitch cut Japan's rating.
"The weakening rupee is dangerous for us as it will hurt our industrial production and lead to higher inflation and interest rates," said P.S. Balasubramanian, head of institutional business at Vertex Securities.
Meanwhile, the Organisation for Economic Co-operation and Development said India's central bank will have limited room to relax its tight monetary stance and boost a slowing economy as inflation remains generalized and above its comfort level.
Maruti Suzuki India fell 4.5% to INR1,153.20 due to its dependence on imports of components from Japan, said dealers.
Bank also fell sharply, with State Bank of India dropping 3.4% to INR1,938.50 and HDFC Bank closing 1.7% down at INR489.05.
Sterlite Industries fell 4.0% to INR95.80 after Kim Eng India cut the stock to hold from buy and lowered its price target to INR102 from INR129 as the house expects the company's first-quarter net profit to fall 60% due to mark-to-market losses on foreign-currency loans.
"The stock may bounce back if the rupee strengthens," Kim Eng said.
-By Raghavendra Upadhyaya; Dow Jones Newswires; 91 22 61456103; raghavendra.upadhyaya@dowjones.com
