Sensex falls 455 points; RBI comments, rupee moves key

By Abhishek Vishnoi

MUMBAI (Reuters) - The BSE Sensex and the Nifty declined more than 2 percent on Friday, marking their biggest single day percentage fall in about 14 months as lenders such as ICICI Bank reeled after economic growth data dashed hopes the central bank would cut interest rates next month.

India's economy grew 4.8 percent in the January-March quarter from a year earlier, in line with expectations and dashing hopes that a slower-than-expected growth would spark more aggressive rate cuts from the Reserve Bank of India. (Read full story http://in.reuters.com/article/2013/05/31/india-economy-idINDEE94U03M20130531)

The dismal GDP number came when sentiment had already been hit after RBI Governor Duvvuri Subbarao warned retail inflation was still high and expressed worry about the current account deficit.

 

Dealers added that any comments from the RBI, a further fall in the rupee and the arrival of the annual monsoon rains would be the key for the near-term direction.

"The government needs to act for the RBI to cut rates further, nervousness may remain due to falling rate-cut bets and rupee depreciation," said Deven Choksey, managing director of K R Choksey Securities.

The BSE Sensex fell 2.25 percent, or 455.10 points, to end at 19,760.30, marking its biggest single day fall since March 22, while gaining 0.3 percent for the week.

The broader Nifty declined 2.26 percent, or 138.10 points, to finish at 5,985.95, closing below the psychologically important 6,000 level. It ended flat for the week.

The NSE's sub-index of banking stocks declined 2.6 percent as lenders such as HDFC Bank Ltd fell on dwindling rate-cut hopes.

The RBI has cut interest rates by 75 basis points already this year.

HDFC Bank fell 3.4 percent, ICICI Bank Ltd ended 2.4 percent lower, while State Bank of India declined 2 percent.

Recent outperformers such as Sun Pharmaceutical Industries Ltd and Mahindra & Mahindra Ltd (M&M) fell on profit-booking after hitting their respective all-time highs on Thursday.

Sun Pharma fell 2.8 percent while M&M declined 3.7 percent.

DLF Ltd fell 5.4 percent after India's largest real estate developer posted its first-ever quarterly net loss, weighed down by slowing home sales in a sluggish economy.

Suzlon Energy Ltd fell 10 percent to a record low on Friday after the wind turbine maker said its January-March net loss widened from a year earlier.

However, among stocks that gained, technology shares rose as the rupee depreciation is seen boosting their overseas earnings. Infosys Ltd rose 3 percent.

(Editing by Anand Basu)