Sensex slumps nearly 300 points; ICICI falls 5 percent

By Abhishek Vishnoi

MUMBAI (Reuters) - The Nifty fell nearly 2 percent on Monday to its lowest close in 11 months, as blue chips slumped after a record low rupee aided fears of foreign selling and more steps by the RBI to stem dollar outflows. The Sensex fell 1.6 percent.

India's benchmark 10-year bond yield also rose to its highest level in five years, to pre-Lehman crisis levels, as the rupee fell to a record low of 62.82 to the dollar despite several efforts from policymakers to arrest the slide.

The rupee's slide has fuelled expectations of more action from the Reserve Bank of India (RBI), which last week curbed outflows from companies and individuals, roiling stock and bond markets.

 

Also, foreign institutional investors (FIIs) extended selling in index futures for a fourth day on Friday, totalling sales of 20.63 billion rupees, indicating they are bracing for lower levels in cash shares in the near term, dealers said.

"A depreciating rupee will result in increased costs for various companies, thereby impacting margins. Thus, even at lower stock prices, the valuations have not turned appealing," said Dipen Shah, head of Private Client Group Research, Kotak Securities.

The Sensex fell 1.56 percent, or 290.66 points, to end at 18,307.52, adding to Friday's 4 percent fall, marking its lowest close in nearly four months.

The Nifty slumped 1.69 percent, or 93.10 points, to end at 5,414.75, marking its lowest close since September 11, 2012.

Investors are also waiting to see if minutes of the Federal Reserve's last policy meeting due on Wednesday will provide some clarity on when it might start scaling back stimulus.

Blue chips including ICICI Bank fell 5 percent on fears that foreign investors may pare their holdings in Indian stocks as the rupee hit a new low.

Among other large cap stocks, ITC fell 2 percent, while Sun Pharmaceutical Industries slumped 4.1 percent.

Bharti Airtel lost 5.4 percent, weighed down by concerns over higher foreign currency loans.

Shares in Tata Motors fell 3.9 percent after Moody's said the company's shrinking market share in passenger and commercial vehicle sales was credit negative and would lead to weaker operating performance.

Axis Bank plunged 5.8 percent adding to Friday's 8.8 percent fall after MSCI said it would exclude the bank from its standard and large-cap indexes.

Titan Industries fell 2.4 percent after slumping 12.1 percent on Friday as the RBI banned imports of gold coins and medallions and required domestic buyers to pay cash for the yellow metal, among other measures.

However among stocks that gained, technology shares such as Infosys rose 0.9 percent as a falling rupee was seen improving its realisations.

(Editing by Anand Basu)