Indian shares to fall on weak coalition fears

MUMBAI, May 14 (Reuters) - Indian shares are expected to
drop on Thursday after exit polls at the end of national
elections indicated a weak coalition government may come to
power.

Three exit polls on Wednesday showed the ruling
Congress-led coalition was slightly ahead of the opposition
Bharatiya Janata Party (BJP)-led alliance, but both groups were
in need of smaller allies to gain a parliamentary majority.
Official results will be released on Saturday. [ID:nBOM448907]

The market had been betting on a win for the market
friendly BJP, but fell more than 1 percent on Wednesday on
nervousness after rising 4 percent the day before.

"I wouldn't attach too much credibility to the exit polls.
But there's clearly a lot of nervousness in the markets, also
given the global backdrop," said Rajeev Malik, chief economist
at Macquarie in Singapore.

India's elections are notoriously hard to predict and most
exit polls in the last general election in 2004 were off the
mark.

"Investors are going to just wait it out. It doesn't play
to be a hero in this market," Malik said.

Deven Choksey, chief executive of K.R. Choksey &
Securities, said if BJP-led alliance muster more than 190 seats
it would be easier for them to form a majority with some other
like-minded partners.

"I think the market will wait for the actual results before
moving in any particular direction. Until then we can expect
volatility with a downward bias," he said.

Weekly inflation due around midday (0630 GMT) will be
watched, though the political uncertainty will be the key,
traders said.

The annual inflation rate is expected to have fallen back
towards zero at the start of May after rising in the previous
three weeks, a Reuters poll of analysts showed on Wednesday.
[ID:nBOM473364]

Indian banks have more room to lower their lending rates
after aggressive rate cuts by the central bank since last
October, Reserve Bank of India Governor Duvvuri Subbarao said
on Wednesday. [ID:nBOM329035]

Asian markets were lower on Thursday after a recent rally.
Japan's Nikkei .N225 was down 2.9 percent by 0359 GMT, while
MSCI's measure of other Asian markets .MSCIAPJ fell 3.2
percent.

Nifty futures traded in Singapore SINc1 were down 2.2
percent, pointing to a lower opening in India.

The 30-share BSE index .BSESN shed 1.14 percent to
12,019.65 points on Wednesday, a day after climbing to its
highest close in seven months.
--------------------MARKET SNAPSHOT AT 0400 GMT--------------

INSTRUMENT LAST PCT CHG NET CHG
S&P 500 .SPX 883.92 -2.69% -24.430
USD/JPY JPY= 95.47 -0% 0.000
10-YR US TSY YLD US10YT=RR 3.0994 -- -0.013
SPOT GOLD XAU= 924.65 -0.09% -0.800
US CRUDE CLc1 57.53 -0.84% -0.490
DOW JONES .DJI 8284.89 -2.18% -184.22
ASIA ADRS .BKAS 104.20 -3.31% -3.57
-------------------------------------------------------------

STOCKS TO WATCH

* Wipro Ltd (WIPR.BO), after the outsourcer said its U.S.
unit had secured a $34 million four-year contract from Sunoco
Inc (SUN.N).

* Hinduja Global Solutions (HGSL.BO), after the back office
services provider said net profit for the March quarter rose by
half to 360.7 million rupees.

* Lupin Ltd (LUPN.BO), after the drug maker posted a
market-beating 64 percent rise in quarterly net profit spurred
by robust growth in U.S. and domestic markets and forecast a 30
percent revenue growth for 2009/10. [ID:nBOM405970].

* Container Corp of India (CCRI.BO), after its managing
director told Reuters an improving economy should increase
volumes, reversing last year's declines, and enabling faster
sales growth in 2009/10. [ID:nDEL85867].

FACTORS TO WATCH
* For technical analysis, double click on
www.reutersindia.net
* Indian rupee may ease, election results eyed
[INR/]
* India bond yields may ease on ruling coalition hopes
[IN/]
* Dollar, yen near week's highs as caution lingers
[FRX/]
* Oil falls below $58 on renewed demand concerns
[O/R]
* Global stocks slide on economic fears, gold
rises[MKTS/GLOB]
* Wall St falls as retail data renews economic angst
[.N]
* For closing rates of Indian ADRs
INADR
(Reporting by Pratish Narayanan and Bharghavi Nagaraju;
Editing by Ranjit Gangadharan)