Indian shares fell for a second consecutive session on Friday to mark their lowest close in almost a month as sustained fears that a weakening rupee would lead foreign investors to pare positions hit bluechips such as HDFC Bank Ltd. Falls also tracked weakness in other Asian markets as the MSCI Asia ex-Japan index fell to a six-month low with investors fretting over US jobs data due later in the day.
The rupee weakened below 57 to the dollar, depreciating more than 5.5 percent since the start of May, to approach a record low hit about a year ago. The rupee's weakness is likely to keep the market volatile and could encourage further fund outflows, dealers said, noting that foreign institutional investors sold about 50.5 billion rupees of index futures in the last five trading sessions.
"Lack of other data points has resulted in rupee taking centre seat in determining the direction of the equity markets," said Nagji K Rita, chairman and managing director of brokerage Inventure Growth & Securities. A fall in the rupee is always a concern for foreign investors who are already holding a portfolio in India, added Nagji. The benchmark BSE index fell 0.46 percent, or 90.26 points, to 19,429.23, marking its lowest close since April 29 and ending 1.7 percent lower for the week.
The broader NSE index fell 0.68 percent, or 40.40 points, to 5,881, closing below the psychologically important 5,900 level and declining 1.8 percent for the week. Bluechips fell with HDFC Bank dropping 0.9 percent and Reliance Industries Ltd declining 1.1 percent on continued fears that a falling rupee would lead foreign investors to pare positions.
Reliance Communications Ltd ended 1.2 percent lower even after striking a $2.1 billion telecoms tower pact with Reliance Industries' telecommunications unit, Reliance Jio Infocomm, as income from the said deal was seen as lower than expectations, analysts said. Reliance Industries will lease up to 45,000 mobile masts from Reliance Communications in a deal valued at more than 120 billion rupees ($2.1 billion) over the lifetime of the contract, the Indian companies said.
Tata Motors Ltd fell 1.6 percent on fears that China could impose retaliatory trade duties on luxury cars imported from the European Union may weigh on unit Jaguar Land Rover Ltd's earnings outlook. Titan Industries Ltd ended 1.7 percent down, falling for a sixth consecutive session, as India increased import duty on gold by a third to 8 percent on Wednesday, which was seen hurting its earnings outlook.
India is the world's biggest buyer of bullion and the government is seeking to halt a surge in demand that threatens to widen a record current account deficit. Future Retail Ltd fell 3.1 percent after the government said foreign supermarkets entering India must invest in new supply infrastructure, rather than buying existing assets. New rules requiring foreign supermarkets to set up their own warehouses and stores in India are likely to further delay the entry of companies like Wal-Mart Stores Inc, increase costs and hurt cash-strapped local retailers eager to partner with foreign companies. However, among stocks that gained, software exporters rose on value-buying and weak rupee, dealers said. Tata Consultancy Services Ltd gained 3.3 percent, while Wipro Ltd rose 1.5 percent and Infosys Ltd ended 0.7 percent higher.
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