Soaring rupee downs tech stocks

MUMBAI: Indian shares ended down on Wednesday as a strong rupee hit export-dependent tech and pharma stocks and investors trimmed positions ahead of the expiry of monthly derivatives contracts next session, traders said.

The 30-issue Bombay Stock Exchange index eased 0.11 percent to 5,395.28 points, just off a three-month closing low struck on Monday.

Market breadth was negative, with losers outnumbering gainers 926 to 767 in thin trade of 97 million shares.

"It's the March phenomenon, with corporates pulling out for tax considerations at the fiscal year-end and no interest in buying from retail investors either," said Om Prakash, an analyst at HDFC Securities.

"There is some support at the lower levels, which is keeping the index from falling too much, but the downward bias will persist for a few more weeks," he said.

The Indian rupee stayed above the 45 level against the dollar on strong trade flows and expectations of swelling foreign investments.

This hurt sentiment on the technology sector, which gets around 70 percent of its revenue from exports.

Bellwether Infosys Technologies Ltd, India's second-largest exporter of software services, fell more than two percent to 5,044.70 rupees. A company official told Reuters its software services exports have not yet been hit.

Wipro Ltd, the third-largest exporter of software services, fell nearly one percent to 1,384.50 rupees. Drug firms also suffered from the firmer rupee. Dr. Reddy's Laboratories Ltd fell nearly two percent to 987.30 rupees and Ranbaxy Laboratories Ltd slipped nearly two percent to 915.60 rupees.

Steel stocks were down on concerns of reduced demand from China. Tata Iron and Steel Co Ltd, the second-largest steel maker, fell more than two percent to 356.25 rupees. Aluminium major Hindalco Ltd slipped more than four percent to 1,254.50 rupees.

Cement issues ended lower on concerns the government would curb prices to check inflation before general elections in April-May. Grasim Industries Ltd, the third-largest producer, fell nearly one percent to 1,014.60 rupees.

Firmer international crude oil prices propped up refiners. State-run Hindustan Petroleum Corp Ltd was up nearly two percent at 480 rupees while oil retailer IBP Ltd rose more than three percent to 545.40 rupees.

Tata Motors Ltd, India's largest maker of commercial vehicles, gained 2.5 percent to 439.35 rupees after Moody's Investors Service changed the outlook on its ratings to positive from negative.

Drug maker Abbott India rose 1.4 percent to 429.45 rupees after it said its fiscal first quarter net profit rose to 194.3 million rupees compared to 103 million rupees a year earlier.

The broader National stock exchange index closed 0.25 percent lower at 1,692.10 points.

© Reuters