Indian shares fell 2.7 percent on Friday to their lowest close in three months, as global selloff over Europe's sovereign debt problems and US jobs worries raised fresh concerns over world recovery and dented sentiment.
Traders said foreign investors unwound their positions in futures and options, indicating there could be cash outflows and put further pressure on the spot market. The main index dropped 3.5 percent on the week, its third straight weekly fall.
"What we are seeing is dollar-carry-trade unwinding by foreign investors," said Neeraj Dewan, director, Quantum Securities. "They borrowed when the dollar was cheap and now that the dollar is recovering, they are unwinding." Reliance fell 3.7 percent to 981.30 rupees, its lowest close in three months. Just before trading ended, CNBC TV18 business channel reported the company has submitted a $2 billion expression of interest for private Canadian firm Value Creation Inc, which holds oil sands assets.
The 30-share BSE Index ended down 2.68 percent, or 434.02 points, at 15,790.93, its lowest close since November 3 and the second biggest one-day percentage fall since then. Only one component gained. It's a classic tug-of-war," said Deven Choksey, chief executive of Mumbai brokerage KR Choksey Shares & Securities.
State-run NTPC Ltd, India's leading power producer, has also received full subscription for its $1.8 billion share sale that closes on Friday. The stock closed 1.6 percent lower at 201.30 rupees, near the floor price of 201 rupees for investorsin the follow-on public offer.
Top lender State Bank of India and rival ICICI Bank led the losses in banking stocks. ICICI dropped 3.7 percent to 798.35 rupees, while larger SBI shed 2.7 percent to 1,896.65 rupees. The sector index lost 3.04 percent. Among tech stocks, software bellwether Infosys fell 2.9 percent to 2,352.20 rupees, while larger rival Tata Consultancy gave away 2.2 percent to 726.05 rupees. Wipro slipped 2.1 percent to 640.90 rupees.
Ranbaxy Laboratories slid 5 percent to 404.85 rupees after the Economic Times reported the US regulator asked the drugmaker to immediately assess whether its plants making drugs for the US market met standards. In the broader market, losers led advances in the ratio of 2.8 to 1 on moderate volume of 395 million shares. The 50-share NSE index ended down 2.6 percent at 4,718.65 points, its lowest close since November 4.
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