* Rising borrowing costs trigger growth concerns
* Better-than-expected factory data fails to enthuse
* ICICI drops 4.2 pct after rising over a fifth in five
days
(Updates to close)
By Sumeet Chatterjee
BANGALORE, Aug 12 (Reuters) - Indian shares snapped a
five-day rally and fell 1.9 percent on Tuesday, led down by
ICICI Bank (ICBK.BO) and Infosys (INFY.BO), as investors locked
in profits on concerns about high interest rates hurting
growth.
Traders said a better-than-expected 5.4 percent rise in
factory output in June failed to lift sentiment, as the
expansion was far below double-digits seen in 2006 and early
2007 and the outlook was marred by rising borrowing costs.
[ID:nDEL260480]
State Bank of India (SBI.BO), the country's largest lender,
raised its prime lending rate by 100 basis points to an annual
13.75 percent effective Tuesday.
The increase followed a half percentage point hike in the
key lending rate by the central bank on July 29 to a seven-year
high of 9 percent to calm inflation running at 12 percent, the
highest in more than 13 years.
The main 30-share BSE index .BSESN ended down 1.88
percent, or 291.79 points, at 15,212.13, after rising 6.4
percent in the previous five sessions.
The benchmark fell as much as 2.4 percent during trade
after starting up 0.5 percent. All but five of the index
components lost ground.
"There will be consolidation at these levels, and investors
should use sharp dips for fresh buying," said Neeraj Dewan, a
director at Quantum Securities. "The market looks good in the
short to medium term if nothing goes wrong with the oil
prices."
Oil fell below $113 a barrel to a three-month low on
Tuesday, dropping for the third day in a row, after the
International Energy Agency predicted supplies would be more
adequate and Russia called a halt to the conflict in Georgia.
[O/R]
Prices of oil, India's biggest import, have fallen more
than $30, or around 23 percent, from a record above $147 a
barrel touched on July 11.
The BSE index, which is down 25 percent in 2008, has
rebounded 21 percent since falling to a 15-month low last month
after a sharp drop in the oil prices eased concerns of further
monetary tightening.
JM Financial Services said in a report the BSE index looked
set to get closer to its short-term target of 16,000 this week,
after having crossed important resistance of 15,300.
Brokerage India Infoline, however, said the market was
still facing headwinds, both local as well global, and
investors should not get get carried away by momentum as the
trend could reverse rapidly.
No. 2 lender ICICI fell 4.2 percent to 738.40 rupees, its
biggest single-day loss in two weeks, as investors locked in
profits after the stock had jumped more than 20 percent in five
days after inflation expectations eased.
Infosys Technologies fell 4 percent to 1,603.70 rupees on
renewed fears of worsening global credit crisis after Swiss
bank UBS reported worse-than-expected results.
Global banks and financial services firms account for a
bulk of the revenue of Indian software services firms such as
Infosys.
In the broader market, 1,559 losers led 1,097 gainers on
volume of 315 million shares.
The broader 50-share NSE index fell 1.47 percent to
4,552.25.
Elsewhere in the region, Karachi's 100-share index
shed 2.05 percent to 9,963.58 amid political uncertainty
prompted by plans to impeach the country's president and
growing violence in the northwest. [ID:nISL273917]
Colombo's All-Share index .CSE ended down 0.7 percent at
2,447.18.
STOCKS THAT MOVED
* State Bank of India ended 2.2 percent down at 1,557.55
rupees after it raised interest rates.
Merrill Lynch said the loan growth of Indian retail banks
was likely to moderate to 18-20 percent in this fiscal year to
March and to 16-17 percent in 2009/10, as the rise in lending
rates begins to take its toll on credit demand.
* Trent (TREN.BO) rose 10 percent to 545.85 rupees after
the retailer said it had entered into an franchisee agreement
with UK's Tesco Plc (TSCO.L), the world's No. 3 retailer.
[ID:nLC613939]
MAIN TOP 3 BY VOLUME
* Reliance Natural Resources (RENR.BO) on 17 million shares
* Chambal Fertilisers (CHMB.BO) on 16 million shares
* Nagarjuna Fertilisers (NGFR.BO) on 12 million shares
FACTORS TO WATCH
* Indian rupee extends losses as gains in dlr weigh
[INR/]
* Indian bond yields rise after industrial output data
[IN/]
* FOREX-Dlr powers to 6-mth high; euro on the backfoot
[FRX/]
* Oil falls to 3-month low, IEA, Georgia in focus
[O/R]
* GLOBAL MARKETS-Economy worries boost dollar, hit commodities
[MKTS/GLOB]
* US futures point to Wall St dip,financials in focus
[.N]
* For closing rates of Indian ADRs
INADR
(Editing by Ranjit Gangadharan)
