* Exit polls give small lead to ruling coalition
* Reliance, bank lead losses
* Annual inflation data expected around midday (0630 GMT)
(Updates to late morning)
MUMBAI, May 14 (Reuters) - Indian shares were trading down
1.3 percent on Thursday, as investors braced for general
election results on Saturday amid concerns it may produce a
weak coalition.
The market initially fell 2.7 percent after exit polls
indicated a slender lead for the ruling Congress-led coalition
(UPA) over the opposition Bharatiya Janata party (BJP)-led
alliance (NDA), but both groups will need smaller allies to
gain a parliamentary majority. [ID:nBOM448907]
India's elections are hard to predict and most exit polls
in the last general election in 2004 were off the mark.
Analysts said the market would rise if either of the two groups
were able to cobble together a government. A group of smaller
regional parties including the communists are also in the fray.
"The race between the UPA and NDA appears to have become
closer," Tushar Poddar, an analyst at Goldman Sachs, said.
If the exit polls are accurate, the UPA would likely come
to power after building a coalition with some regional parties
and the communists, and allay market fears that a weak
coalition of only regional parties will gain power, he said.
By 11:34 a.m. (0604 GMT), the 30-share BSE index .BSESN
was down 1.3 percent at 11,861.13 points, with 25 stocks
declining.
The benchmark had fallen more than 1 percent on Wednesday
as the political outlook became clouded, after rising 4 percent
in the previous session on speculation the market-friendly BJP
group is gaining momentum.
The index has rebounded almost half from its March low and
is up 23 percent this year after plummeting 52 percent in 2008.
Energy giant Reliance Industries (RELI.BO) and lenders
ICICI Bank (ICBK.BO), HDFC Bank (HDBK.BO) and State Bank of
India (SBI.BO) dragged the main index lower. Trading is
expected to volatile till official results are announced.
"Investors are going to just wait it out. It doesn't play
to be a hero in this market," said Rajeev Malik, chief
economist at Macquarie in Singapore.
"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."
Weekly inflation data is due around midday (0630 GMT), but
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]
Reliance Industries, which has the biggest weight in the
main index, fell 1.4 percent to 1,911.35 rupees.
Private-sector lender ICICI Bank shed 3.2 percent to 532.05
rupees, while rival HDFC Bank dropped 1.5 percent to 1,145.50
rupees. Government-run State Bank of India eased 0.8 percent to
1,251.95 rupees.
In the broader section, losers led gainers 1,073 to 866 on
relatively moderate volume of 128.1 million shares.
The 50-share NSE index was down 1 percent at
3,599.40.
MAIN TOP 3 BY VOLUME
* Unitech (UNTE.BO) on 4.1 million shares
* Suzlon Energy (SUZL.BO) on 3.5 million shares
* IDFC (IDFC.BO) on 3.4 million shares
STOCKS ON THE MOVE
* Hinduja Global Solutions (HGSL.BO) surged 20 percent to
205.65 rupees after the back-office services provider said net
profit for the March quarter rose by half to 360.7 million
rupees.
* Hindustan Motors (HMTR.BO) fell 4.2 percent to 16.15
rupees after the car and auto parts maker posted a net loss in
the March quarter, compared with a profit last year.
FACTORS TO WATCH
* For technical analysis double click on www.reutersindia.net
* Indian rupee off 2-wk lows as stocks trim losses
[INR/]
* India bond yields at 1-week low; auction eyed
[IN/]
* Dollar, yen near week's highs as caution lingers
[FRX/]
* Oil falls below $58 on renewed demand concerns [O/R]
* Asia stocks down, risk bets cut on recovery doubt
[MKTS/GLOB] * Wall St falls as retail data renews economic
angst [.N] * For closing rates of Indian ADRs
INADR (Reporting by Pratish Narayanan; Editing by
Ranjit Gangadharan)
