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Business News/ Opinion / Online-views/  Sensex sheds 1.6% to close at 2-week low
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Sensex sheds 1.6% to close at 2-week low

Sensex sheds 1.6% to close at 2-week low

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Mumbai: Indian shares fell 1.6% to their lowest close in two weeks on Tuesday, with export-driven Tata Consultancy Services Ltd (TCS) sliding the most in more than two years over uncertain global economic outlook.

Traders said investor sentiment was dented by comments from the German finance minister against a quick-fix to Europe’s debt problems, slowing growth in China and a warning on France’s sovereign credit rating.

“There is a significant impact from the way things are unfolding globally. The worries that the worst may not be over is certainly affecting sentiment," said Kishore P. Ostwal, managing director, CNI Research said.

Software services companies that get most of their revenues from exports led the fall.

TCS, India’s biggest software services exporter, fell 7.7% to 1,033.55, a day after the company reported lower-than-expected quarterly earnings and said the outlook for pricing was tough. It was the steepest one-day slide since 19 May, 2009, when it had slumped 10%.

UBS downgraded the stock to “sell" from “neutral", while maintaining its target price of 1,000 on back of concerns about the spending outlook for the current fiscal, especially in financial services. Rivals Infosys Ltd and Wipro Ltd shed 1.6% and 3%, respectively.

The main 30-share BSE index ended down 1.63% at 16,748.29, its biggest drop since 4 October. Twenty-six of its components declined.

The benchmark, which had risen 5.2% last week in a bounce-back, is down about 17% so far this year.

Ostwal said investors were also wary after monthly derivatives contracts expiry was brought forward by two days to 25 October due to holidays.

Shares in HCL Technologies Ltd, India’s fourth largest software services firm, fell 8.75% as investors shrugged off a 50% jump in quarterly profit and focused on a cloudy outlook for the sector amid slowing global growth.

India’s showpiece $76 billion industry gets more than 90% of its revenue from providing technology services to overseas clients and counts the US and Europe as its biggest markets.

Banking shares fell on worries over rising interest rates and slowing growth in Asia’s third-largest economy, which have been eroding asset quality. State Bank of India dropped 1.3%, while rival ICICI Bank Ltd fell 2.5%.

Expectations that the central bank will raise rates next Tuesday when it reviews policy have gathered momentum after September inflation remained high.

The 50-share National Stock Exchange index shed 1.58% to 5,037.50. In the broader market, there were 2.8 losers for every gainer on total volume of about 450 million shares.

MindTree Ltd rose 3.1% after it reported 58% jump in consolidated quarterly net profit.

ING Vysya Bank Ltd ended 3.95% higher after it reported a 53% rise in September quarter net profit.

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Published: 18 Oct 2011, 10:35 PM IST
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