Indian shares fell 1.82 percent on Monday, taking their cues from global equities that were dragged down by fresh worries over euro-zone debt, but traders say the recent correction in commodity prices may provide a respite to the local market. Financials led the fall, with lenders State Bank of India, ICICI Bank and HDFC Bank dropping between 2.3 and 3.48 percent.
A superior court rejected bail to five company executives charged in a multi-billion dollar telecoms corruption scandal, pushing down shares of the companies linked to the executives. Unitech and DB Realty slumped 5.76 and 7.3 percent, respectively. Reliance Communications fell 2.38 percent. Software services exporter Mahindra Satyam ended down more than 4 percent after it reported a fourth-quarter loss of 3.27 billion rupees ($72 million), hurt by a one-time expense on settlement of litigation. [
"The Sensex nose-dived nearly 2 percent on broad based selling in the market on account of global cues," Parag Doctor, a technical analyst at brokerage Motilal Oswal, said. Global markets witnessed a sharp fall after Fitch cut Greece's credit rating and Standard & Poor's said Italy's rating was at risk, Doctor added. On Saturday, Finance Minister Pranab Mukherjee said India would continue to see inflationary pressures due to high global commodity prices.
The central bank has increased interest rates nine times since mid-March last year. High inflation and the prospect of rising energy costs are expected to keep pressure on the central bank to raise rates again when it reviews policy on June 16. The benchmark 30-share BSE index ended down 1.82 percent, or 332.76 points, at 17,993.33, with all but one of its components closing in the negative zone. The 50-share NSE index lost 1.82 percent to end down at 5,386.55 points. In the broader market, 1,159 losers were ahead of 254 gainers on trading volume of more than 465 million shares. Foreign funds have pulled out $1.7 billion this month, taking losses in the benchmark index to about 11 percent since the start of January.
Shares of state-run Bharat Heavy Electricals , India's leading power equipment maker, fell more than 7 percent after it recommended a disinvestment of 5 percent of the paid-up equity capital. Auto stocks continued their losing streak on worries over a demand slowdown after petrol prices were raised by a record 8.6 percent earlier this month. Maruti Suzuki, Mahindra and Mahindra and Tata Motors fell between 0.58 and 3.35 percent.