Indian shares tumbled more than 1 percent on Thursday and government bonds slid to nearly six-week lows as US crude oil prices surged to record highs above $57 a barrel. The benchmark 30-share Mumbai index closed 1.15 percent lower at 6,669.52 points, its lowest close since March 1, weighed down by record high oil prices that fuelled fears of rising inflation in the energy-hungry country.
In spite of the losses, shares of UTV Software Communications Ltd jumped on the debut of the television show producer. UTV rose as much as 35 percent to 175.40 rupees before closing at 168.50 rupees.
Signs that foreign buying, a key support to shares and the rupee, has slowed also weighed on the share index, dealers said. Data on Wednesday showed that foreign funds were net sellers of local shares on Tuesday for the first time since January 25.
The Mumbai index climbed to record highs above 6,900 last week, rallying on strong foreign investment inflows. Foreign funds have bought some $4 billion worth of Indian shares so far in 2005 - nearly half of last year's record level.
"The figures for foreign fund inflows were negative yesterday. That was a little unnerving. High oil prices are acting as a bit of a dampener as well," said Raju Mewawalla, a relationship manager at Emkay Share and Stock Brokers.
The yield on the 10-year benchmark bond ended at 6.6740 percent on Thursday, its highest since February 5, as dealers eyed surging world oil prices and awaited a slew of federal debt issuances in the new year starting in April.
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