Indian Shares Tumble As Iraq Worries Sap Risk Appetite

(RTTNews) - Indian shares tumbled on Friday as oil prices surged on concerns of supply disruption due to rising violence in Iraq. Investors were worried that high oil prices and a weak rupee could add to inflationary pressures. While Brent crude prices traded at a nine-month high, the Indian rupee was last trading down 19 paise at 59.44 versus the dollar.

U.S. president Barack Obama warned of possible military strikes in Iraq after Islamic militants seized large swaths of northern Iraq and threatened to take their fight to Baghdad.

The markets opened higher after industrial output and retail inflation data beat estimates, boosting hopes the domestic economy will rebound in the coming months under the Modi-led regime.

With the optimism proving short-lived, the key benchmark indexes Sensex and Nifty hit one-week lows amid heavy selling across the board.

The benchmark S&P BSE Sensex closed down 348.04 points or 1.36 percent at 25,228.17, while the broader CNX Nifty Index dropped 107.80 points or 1.41 percent to 7,542.10. Second-line stocks also succumbed to selling pressure, with the BSE mid-cap and small-cap indexes closing down 2.5 percent and 3.1 percent, respectively.

In its monthly oil market report, the International Energy Agency sought to play down concerns about potential disruption to oil supplies, saying that there is no immediate risk provided the conflict in Iraq doesn't spread further.

Hero MotoCorp slumped 4.4 percent after multiple block deals on the BSE and NSE. Metal stocks such as Coal India, Hindalco Industries and Tata Steel dropped 1-4 percent on profit taking after recent gains even as a slew of Chinese reports fueled hopes that the world's second-largest economy is stabilizing.

BHEL lost 2.7 percent after commissioning another hydro generating unit at Rampur in Himachal Pradesh. Tata Motors declined 2.6 percent after reporting a 5.14 percent decline in global sales.

Bharti Airtel lost 2.5 percent, extending Thursday's loss, after a foreign brokerage downgraded its rating on the stock, citing competition from rival Reliance Jio Infocomm, a unit of Reliance Industries.

Among the other prominent decliners in the Sensex pack, Larsen & Toubro, ICICI Bank, Maruti Suzuki, Tata Power, SBI, Gail India, NTPC and Axis Bank fell 2-4 percent.

Indian Overseas Bank tumbled 5.4 percent on fund raising reports. Idea cellular retreated 4.7 percent after raising Rs. 3,000 crore through sale of shares to qualified institutional buyers.

Shares of state-run oil companies bore the brunt of the selling on concerns high oil prices will push up their under-recoveries. BPCL, HPCL and IOC plummeted 5-8 percent.

IT and healthcare stocks were among the major gainers, with Infosys, Dr Reddy's Laboratories and Hindustan Unilever gaining less than a percent each. Mahindra & Mahindra rose 0.4 percent after HSBC upgraded its rating on the stock to "overweight" from "neutral".

On the global front, the other Asian markets ended mixed, paring early losses, as energy stocks advanced and investors found comfort in Chinese industrial output and retail sales data that came along expected lines. European stocks declined in early trading as energy prices soared and investors awaited a report on U.S. consumer confidence later in the day for further direction.