BSE Sensex falls in volatile session; rupee key

By Abhishek Vishnoi

MUMBAI (Reuters) - The BSE Sensex fell on Thursday as sustained fears that a weakening rupee would lead foreign investors to pare positions hit blue chips such as Bharti Airtel and HDFC Bank.

Reliance Industries Ltd also fell after the energy conglomerate's annual general meeting concluded with no major announcements, disappointing those investors who had speculated about a potential deal involving its telecom unit.

The decline also tracked weak global shares ahead of a U.S. monthly jobs data on Friday that comes in the backdrop of a debate on a potential end to the Federal Reserve's monetary stimulus programme.

Fears over a rollback of stimulus have driven Indian shares down 0.8 percent so far this month following gains made in April and May on the back of strong foreign buying.

By contrast, foreign investors have sold about 39 billion rupees worth of index futures in the last four trading sessions, leading to concerns the weaker rupee, which is approaching a record low hit last year, is leading them to pare positions.

"FIIs seem to be trapped by rupee's move and given DIIs are not buying, even a billion dollar worth of selling by FIIs may depress asset prices significantly," said G. Chokkalingam, executive director and chief investment officer at Centrum Wealth Management.

The benchmark BSE Sensex fell 0.25 percent, or 48.73 points, to end at 19,519.49.

The broader Nifty fell 0.04 percent, or 2.45 points, to end at 5,921.40, after earlier falling close to its 200-day volume-weighted moving average of 5,865.58.

Blue chips fell, with Bharti Airtel dropping 2.4 percent and HDFC Bank declining 0.8 percent on continued fears that a weakening rupee would lead foreign investors to pare positions.

Reliance Industries shares fell 1.3 percent on profit-taking caused by a lack of surprise positive announcements at its annual meeting.

The energy conglomerate said it will spend more than $26 billion across its businesses over three years, but gave few details of plans for its long-anticipated launch of 4G telecommunications services.

Reliance shares had risen 2.7 percent on Wednesday on hopes it would make a major announcement on its telecoms unit.

Sun Pharmaceutical Industries Ltd fell 1.8 percent after a source with knowledge of the matter said talks about a deal with Sweden's Meda acquisition had foundered on valuation.

Shares in Titan Industries Ltd ended 0.7 percent down, after falling as much as 2.2 percent earlier, as India increased import duty on gold by a third to 8 percent, which was seen hurting its earnings outlook, dealers said.

India is the world's biggest buyer of bullion and the government is seeking to halt a surge in demand that threatens to widen a record current account deficit.

However, among stocks that gained, lenders rose on value-buying as recent losses were seen as overdone.

ICICI Bank gained 1.8 percent, while State Bank of India Ltd rose 0.8 percent.

Larsen & Toubro gained 0.8 percent after it said unit L&T Construction had won orders valued at 20.02 billion rupees in May and June.

L&T also said on Wednesday it had bagged a $300 million gas project in Saudi Arabia.

(Editing by Jijo Jacob)