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Sensex falls as state election outcome disappoints


By Paul

(Reuters) - Indian shares fell on Wednesday as doubts over the composition of the next government in the southern state of dampened investor risk appetite.

Narendra Modi's Bharatiya Janata Party (BJP)won 104 seats, falling marginally short of the 113 seats needed to form a government, while the opposition clinched 78.

The said it was ready to let regional party (Secular), which stood third with 37 seats, to form a government to stop nationalist BJP from taking power.

However, analysts say the outcome of Karnataka's election results only strengthens the BJP's re-election prospects in 2019, something the markets will be optimistic about.

"Markets are at very high levels and hence very volatile, so every event will be met with overreaction," said Sudhakar Pattabiraman, at William O'Neil's MarketSmith.

"Because of a few state elections coming up this year, expect markets to remain volatile but in the long term, things look extremely positive. There are strong indications that BJP will win the 2019 "

also announced its trade deficit data on Tuesday, which slightly widened to $13.72 billion in April from $13.25 billion a year ago.

The broader NSE Nifty was down 0.46 percent at 10,751.8 as of 0611 GMT, while the benchmark BSE Sensex was 0.38 percent lower at 35,408.98.

Asian shares were down as well after called off talks with South Korea, throwing a U.S.-North Korean summit into doubt.

The index of fell 3.3 percent, dragged down by (PNB) and Syndicate Ltd, which fell 13.7 percent and 10.7 percent respectively, after the duo posted a March-quarter loss on Tuesday.

PNB reported a record quarterly loss of 134.17 billion rupees ($1.98 billion) with analysts worried about the bank's growth prospects, while Syndicate posted a loss of 21.95 billion rupees compared with a profit of 1.04 billion rupees last year.

dropped to its lowest in six months after India's bankruptcy court allowed a insolvency plea filed by Sweden's

($1 = 67.8100 Indian rupees)

(Reporting by Paul in Bengaluru; Editing by Sunil Nair)

(Only the headline and picture of this report may have been reworked by the Business Standard staff; the rest of the content is auto-generated from a syndicated feed.)

First Published: Wed, May 16 2018. 12:27 IST