Sensex declines 185.43 points

MUMBAI - Indian shares fell 1.3 per cent on Wednesday to their lowest close in almost a week, as investor confidence was rattled after oil rose for a third day, fanning higher inflation and borrowing cost worries.

By (Bombay Stock Exchange, Reuters)

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Published: Thu 28 Aug 2008, 11:37 PM

Last updated: Sun 5 Apr 2015, 12:00 PM

Software bellwether Infosys Technologies bucked the trend, after the company said it was better positioned than other possible bidders for British consultancy Axon Group Plc because its offer had management backing.

The stock rose 0.6 per cent to 1,708 rupees, a day after easing 0.3 per cent on concern a bidding war could push up the acquisition cost and hurt earnings in the near term.

Financial stocks fell as oil climbed above $117 a barrel, triggering worries the central bank may again tighten monetary policy to douse inflation expectations. India imports about 70 per cent of its oil.

“Investor confidence was shaken in late trade after oil started moving up faster,” said Jayesh Shroff, fund manager at SBI Mutual Fund. The 30-share BSE index dropped 1.28 per cent, or 185.43 points, to 14,296.79, its lowest close since August 21. All but five components fell.

The benchmark is down almost 30 per cent this year. No. 2 lender ICICI Bank dropped 2.7 per cent to 648.85 rupees while leader State Bank of India fell 3 per cent to 1,330.90 rupees, with annual inflation in mid-August expected to hit 12.8 per cent, the highest in more than 13 years. The data is due on Thursday.

Top listed firm Reliance Industries slipped 1.5 per cent to 2,147.85 rupees, its lowest close since July 29, a day after it said it aimed to transfer an 80 per cent stake in a gas-rich deepwater block to four fully owned units.

“Lack of participation by the foreign funds is making it tough to predict a clear direction. Markets would continue to remain choppy with stock specific action,” brokerage India Infoline said in a note.

Foreign funds have sold nearly $7.4 billion of Indian stocks this year on a slowing growth outlook, after pumping in a record $17.4 billion in 2007.

In the broader market, 1,582 losers led 1,021 gainers on volume of 216.7 million shares. The 50-share NSE index fell 1.05 per cent to 4,292.10.

Elsewhere in the region, Karachi’s 100- share index fell 3 per cent to 9,144.93, but Colombo’s All-share index edged up 0.1 per cent to 2,406.39. World stocks hovered around two-year lows with losses in Europe and Japan. European stocks fell as weaker banking stocks outweighed the impact of energy shares.

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