Indian shares at eight-week low

Indian shares fell 1.1 percent on Tuesday to their lowest close in eight weeks after the country's largest lender posted an unexpected slump in quarterly profit, spooking investor confidence that has been hobbled by rising interest ratess. State Bank of India dropped as much as 8.2 percent after its March quarter profit slumped to 209 million rupees ($4.6 million) from 18.67 billion rupees a year ago, on higher provisions for bad loans.
State-run explorer Oil and Natural Gas Corp was another big loser on media reports its share of the fuel subsidy has been increased. The 30-share BSE index shed 1.13 percent, or 207.68 points, to 18,137.35, its lowest close since March 22. Nineteen of its components fell.
In the broader market, 1,739 losers were ahead of 1,074 gainers on low volume of about 219.4 million shares. The 50-share NSE index ended down 1.1 percent at 5,438.95 points. Indian bond, currency and interbank cash markets are closed on Tuesday for a local holiday. Trading resumes on Wednesday.
"The market is looking for a trigger, and today there was negative trigger," said K.K. Mital, head of portfolio management at Globe Capital. "The SBI results have dampened overall sentiment in the market, especially in the banking space." State Bank ended down 7.7 percent at 2,414.70 rupees, its lowest close in more than 22 months. The government-controlled bank said provisions for bad loans in the fiscal fourth quarter rose 49 percent from a year ago, while operating costs increased 12.5 percent.
Other financial stocks also fell after higher-than-expected inflation in April strengthened expectations for another rate increase in June, which would be the 10th rise since mid-March 2010. ICICI Bank lost 1.7 percent, while mortgage lender Housing and Development Finance slipped 0.4 percent. The sectoral index fell 2.2 percent. Headline inflation in April was at an annual 8.66 percent, data on Monday showed, and the prospect of rising energy costs is likely to keep pressure on the central bank to raise rates when it reviews policy on June 16.
ONGC fell 6.6 percent, the most since January 2009, after media reports the government had raised the company's share of fuel subsidy to 38.5 percent. State-run oil refiners had raised petrol prices by about 8.6 percent, a record hike, on the weekend. Energy major Reliance Industries lost 2.6 percent to 920.65 rupees. The stock, which has the heaviest weight on the benchmark index, has shed 13 percent this year, mainly on concerns over decline in gas output from its blocks off India's east coast.
Leading carmaker Maruti Suzuki fell 1.7 percent, Tata Motors lost 2.2 percent, while motorcycle maker Hero Honda dropped 3.2 percent. Among gainers, consumer goods firm Hindustan Unilever and diversified cigarette maker ITC rose 1.5 percent and 0.9 percent respectively.