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Markets at 10-week closing lows on federal probe

Markets at 10-week closing lows on federal probe
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First Published: Wed, Nov 24 2010. 04 45 PM IST
Updated: Wed, Nov 24 2010. 04 45 PM IST
Mumbai: Indian shares dropped 1.2% to their lowest close in 10 weeks, as reports pointed to a federal probe into loans issued by some financial institutions, adding to investor nervousness in a country already grappling with a telecom scandal.
After the stock market closed, India’s federal investigating agency said it had arrested at least eight officials from banks and financial institutions on charges of taking bribes to grant large corporate loans.
The 30-share BSE index closed down 1.18%, or 231.99 points, at 19,459.85 points -- its lowest close since 16 September. Twenty five of its components lost ground.
The banking sector index closed down 2.9%.
“This is another blow. When the sentiment is already difficult, we have more woes being added to it,’ said Arun Kejriwal, director of research firm KRIS.
Officials arrested include the chief executive of LIC Housing Finance, a general manager of state-run Central Bank of India and senior officials at state-run Punjab National Bank and Bank of India, a joint director of the Central Bureau of Investigation told reporters.
Earlier in the day, the Supreme Court postponed a ruling on Prime Minister Manmohan Singh’s handling of a telecoms scandal that has undermined confidence in the administration and paralysed parliament.
The BSE index rose as much as 0.7% earlier, helped by brokerage upgrades.
The benchmark index is up 11.4% in 2010, with foreign funds pumping in nearly $30 billion into Indian equities, including primary market offerings.
However, their interest in the last few session has been volatile as Irish debt woes and North Korea’s deadly shelling of a South Korean island hit their risk-taking capacity.
LIC Housing Finance dropped as much as 21.3%, while Central Bank of India shed as much as 11.2%. Punjab National Bank and Bank of India closed 3.1% and 5.9% lower.
Top mobile phone operator Bharti Airtel gained 0.8% to Rs 331.65 after Goldman Sachs upgraded the stock to “buy” from “neutral.”
Tata Steel firmed 0.5% after CLSA lifted the steelmaker to “outperform” from “underperform,” saying Asian steel prices and the company’s India margins can sustain at current levels through fiscal year 2012.
In the broader market, declining shares beat advancing ones in the ratio of 1.3:1 in a low volume of 348 million shares.
Elsewhere, the FTSEurofirst 300 was up 0.7% by 5:00pm, while the MSCI’s measure of Asian markets other than Japan shed 0.2%.
STOCKS
Aegis Logistics closed 0.1% higher to Rs 350.65 after a top official said the company, which stores and distributes oil, gas and chemicals, plans to spend as much as 20 billion rupees over the next 5-7 years to set up new port projects.
Steel Strips Wheels Ltd gained 1.2% to 410.60 rupees as the company said it is considering allotting security to strategic investor on 13 December on preferential basis.
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First Published: Wed, Nov 24 2010. 04 45 PM IST
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