Indian shares fall 3.1% on growing inflation worries
Mumbai: Indian shares dropped 3.09 per cent on Friday, hurt by a jump in inflation to its highest in more than three years and worries about how policy steps to rein in prices would affect already-slowing economic growth.
Reliance Industries led the losses in the main index, and fell three per cent to Rs2,322.20. Top infrastructure firm Larsen and Toubro ended down 5.7 per cent at Rs2,686.35.
State-run power equipment maker Bharat Heavy Electricals slumped 6.9 per cent to Rs1,634.10, extending losses after reporting a lower-than-expected profit as higher wages and raw material costs pinched margins.
The annual inflation rate rose to seven per cent as at March 22, well above market expectations and the highest since December 2004, data showed.
"The overall sentiment is down in the market and it knows that controlling inflation will remain a challenge," said Chetan Shah, senior portfolio manager at Religare Securities.
The 30-share BSE index fell 489.43 points to 15,343.12, with 28 components falling, its lowest close since March 24.
The index, which is down 24.4 per cent this year, fell 6.3 per cent on the week, its fourth fall in the past five weeks.
HSBC cut its targets for the main index, known as the Sensex, to 17,500 at the end of 2008 and to 21,000 by the end of 2009, adding there were downside risks to earnings growth in Asia's third-largest economy.
Fears of a tightening in monetary policy shook financial shares, with top mortgage lender Housing Development Finance Corp falling 6.8 per cent to Rs2,275.95.
Top private lender ICICI Bank fell 3.1 per cent to Rs763.70 and State Bank of India shed 2.1 per cent to Rs1,605.35. The sector index ended down three per cent.
The 50-share NSE index fell 2.61 per cent to 4,647.00, its lowest close since March 24, taking its losses for 2008 to 24.3 per cent.
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