Indian shares fell 1.5 percent on Tuesday, led by the country's top car maker Maruti Suzuki and in tandem with global markets, as a widening nuclear crisis in quake-hit Japan kept investors on edge. "There is a lot of uncertainty," Arun Kejriwal, director at brokerage KRIS said. "There is a fear that Japanese funds may get withdrawn. If not withdrawn, then, fresh inflows could stop."
Japan is India's sixth-largest investor and has invested more than $22 billion in foreign direct investment over the decade in the country, a note from Citigroup said. Citigroup added the earthquake in Japan was likely to have a fairly limited impact on India, as Japan accounts for just 2.1 percent of total Indian exports and 2.3 percent of its imports.
The 30-share BSE index shed 271.84 points to close at 18,167.64, with all but two of its components in the red. It is down 11.4 percent in 2011, as foreign funds have pulled out $1.8 billion from Indian stocks since the start of the year to March 11. The 50-share NSE index was down 1.48 percent at 5,449.65 points. Maruti, in which Japan's Suzuki Motor Corp owns a 54.2 percent stake, fell on fears the rising yen would dent its profits, market participants said.
Maruti shares shed 3.6 percent to close at 1,214.50 rupees. Rising interest rates, higher commodity prices and high base effect were also pressurising the auto sector as a whole, dealers said. Leading lenders State Bank of India, ICICI Bank and HDFC Bank ended down 1.2-2.2 percent on the day.
The Reserve Bank of India is widely expected to raise key rates by 25 basis points on March 17 and a total of 75 basis points for the rest of 2011, a new Reuters poll found, a more aggressive tightening than previously forecast. Non-ferrous metals producer Sterlite Industries closed 3.3 percent lower while aluminium producer Hindalco shed 2.3 percent. Tata Steel, the world's seventh-largest producer of the alloy, erased 1.3 percent. However, Reliance Industries beat the trend to gain 1.8 percent at 1,036.30 rupees on hopes the company would benefit from shutdown of refining capacities in Japan, analysts said.