* Foreign funds dump shares on global credit woes
* Techs shrug off weak rupee, drop on U.S. worries
(Updates to close)
By Devidutta Tripathy
NEW DELHI, Sept 11 (Reuters) - Indian shares fell 2.3
percent on Thursday to their worst close in about two weeks, as
global financial woes overshadowed a drop in oil prices and
expectations for lower inflation.
Investors took fright after world equities slipped to their
lowest in more than two years, triggering worries of more
withdrawals by foreign funds who have been net sellers of about
$7 billion this year.
Outsourcing companies such as Infosys Technologies
(INFY.BO) and Tata Consultancy (TCS.BO) fell as the financial
sector turmoil in the United States, their biggest market,
rattled traders who saw little comfort from the rupee's slide
to a near two-year low against the dollar.
"Foreign funds are selling across the board. That is making
things more difficult," said R.K. Gupta, managing director at
Ta Taurus Mutual Fund.
Problems at U.S. investment bank Lehman Brothers LEH.N
reminded jittery investors the global credit woes were yet to
run their course and hit banks across Asia.
Although Indian banks are relatively not exposed to the
credit problems, the weak global sentiment is a major dampener,
he said.
The 30-share main BSE index .BSESN fell 2.31 percent, or
338.32 points, to 14,324.29, its lowest close since Aug. 28,
with all but two components falling.
Domestic equity funds saw their first monthly net outflows
in 11 months in August when investors pulled out 290 million
rupees, Morgan Stanley said in a research note on Thursday.
It said equity assets at $39.2 billion were 30 percent
lower than in December last year because of the fall in share
values. The BSE index has lost more than 29 percent this year.
A record quarterly loss of $3.9 billion at Lehman, which is
trying to shed assets to stay alive, refuelled concerns of the
year-long global credit crisis and hit bank stocks across Asia.
ICICI Bank (ICBK.BO) fell 2 percent to 686.45 rupees and
bigger rival State Bank of India (SBI.BO) lost 1.7 percent to
1,538.45 on the weak sentiment towards financials. The bank
index .BSEBANK fell 1.6 percent.
Latest data showed foreign funds had resumed selling after
buying about $187 million on Monday when a global atomic cartel
approved nuclear trade with India, raising hopes for large
investment in the country.
Reliance Industries (RELI.BO), Bharti Airtel (BRTI.BO) and
Oil & Natural Gas Corp (ONGC.BO), which have been the
favourites of foreign portfolio investors, fell the most.
Reliance lost 4.1 percent to 1,997.60 rupees, its lowest
close since July 16, Bharti fell 4.4 percent to 776.20 rupees,
lowest close since July 17. ONGC shed 3.8 percent.
Traders said they would be watching weekly inflation due at
6 p.m. (1230 GMT). A Reuters poll forecast annual inflation to
have eased for the third consecutive week to 11.96 percent on
Aug. 30 from 12.34 percent a week earlier.
Industrial output in July probably rose 6.5 percent from a
year earlier, more than in recent months but still consistent
with a slowing economy as high inflation and interest rates
bite, a Reuters poll showed. The data is due on Friday.
Gupta said the weak stock market was a concern when
inflation was easing and industrial product was expected to
show a revival.
Infosys closed down 0.6 percent at 1,749 rupees and Tata
Consultancy (TCS.BO) lost 1.6 percent to 526.30 rupees.
In the broader market, 1,793 losers were ahead of 861
gainers on volume of 258 million shares.
The 50-share NSE index dropped 2.5 percent to
4,290.30.
Elsewhere in the region, Karachi's 100-share index
ended 0.56 percent lower at 9,263.39 and Colombo's All-share
index .CSE eased 0.5 percent to 2,372.04.
STOCKS THAT MOVED
* Shares in MphasiS Ltd (MBFL.BO) ended 1.2 percent higher
at 249.45 rupees after 4.7 million shares, representing 2.25
percent of the outstanding equity, changed hands in a block
trade on the BSE.
* Indian Hotels Company (IHTL.BO) rose as much as 3.1
percent before closing up 1.1 percent at 76.90 rupees, after it
said it raised room rates by 8-10 percent from Sept. 1.
MAIN TOP THREE BY VOLUME
* IFCI (IFCI.BO) on 15.2 million shares
* Tata Teleservices (Maharashtra) Ltd (TTML.BO) on 10
million shares
* Reliance natural Resources (RENR.BO) on 8.7 million
shares
FACTORS TO WATCH
* Indian rupee weaker as share losses weigh, cbank eyed
[INR/]
* Indian bond yields steady ahead of inflation data
[IN/]
* FOREX-Dollar rallies broadly, hits 1-yr high vs euro
[FRX/]
* Oil falls on dollar, demand; Brent at 6-month low
[O/R]
* GLOBAL MARKETS-World equities at 2-yr low, dollar surges
[MKTS/GLOB]
* US STOCKS-Futures signal lower Wall street start
[.N]
* For closing rates of Indian ADRs
INADR
(Editing by Ranjit Gangadharan)
