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Asia300

India shares edge lower, but telecom stocks surge

MUMBAI (NewsRise) -- Indian shares ended slightly lower on Monday, recording their first decline in five days, as banking stocks fell. But telecom companies jumped after Britain's Vodafone Group confirmed it was in talks to merge its Indian operations with Idea Cellular in an all-share deal.

The benchmark BSE Sensex index declined 0.1% to 27,849.56 points, while the broader NSE Nifty 50 closed 0.1% lower at 8,632.75 points. The indices consolidated in a narrow range as investors awaited fresh triggers. Earnings from key index heavyweights ICICI Bank and Bajaj Auto are due Tuesday, while the government is set to detail its budget for the next fiscal year on Wednesday.

The Sensex rose more than 3% last week, tracking global equities amid expectations New Delhi will announce populist measures in the annual budget to help temper the negative impact from demonetization move.

HDFC Bank and Tata Motors was among the key losers on the Sensex on Monday, while telecom shares were the top gainers.

Telecom stocks rallied, with Idea Cellular, a part of the Nifty index, surging a record 25.9% to 97.95 rupees after the company confirmed merger talks with Vodafone following a spate of media reports on the likely deal. Larger rival Bharti Airtel jumped 7.5% to 347.65 rupees and Reliance Communications ended 11.5% higher at 34.45 rupees.

Idea has been in preliminary discussions with Vodafone, with the fundamental premise of discussion is based on equal rights between Aditya Birla Group and Vodafone in the combined entity, Idea said in a statement. Further, there is no certainty that the discussion will result in any agreement.

The merger, if done, would create a new market leader that will be able to better handle the lingering price war. India's telecom sector has seen competition intensifying with the entrance of Reliance Jio, a unit of Reliance Industries.

Nineteen of the 30 index constituents ended lower on Monday, while overall declining stocks beat advancing ones 1,558 to 1,164, with 245 issues ending unchanged.

"Participants preferred to book some profit after the recent surge, safeguarding their investments ahead of the Union budget," said Jayant Manglik, president, retail distribution, Religare Securities. "Rangebound trading may continue tomorrow as well, but investors should use dips to add quality stocks from auto, private banks and select non-banking finance space."

The BSE Bankex index fell 0.8% at 22,394.75 points as banking stocks saw consolidation after a recent steep rally. The index had gained 4.8% last week.

HDFC Bank led among losers, ending down 0.6% at 1,284.85 rupees. State Bank of India fell 1.3% to 263 rupees. ICICI Bank ended 0.4% lower at 270.85 rupees ahead of its October-December earnings due Tuesday.

Tata Motors declined 2.2% at 532.50 rupees.

Godrej Consumer Products gained 3.5% at 1,604.45 rupees after it reported a better-than-expected third-quarter profit.

Larsen & Toubro ended up 0.3% at 1,443.35 rupees after the engineering and construction company posted a 16.6% on-year increase in quarterly profit over the weekend.

Housing Development Finance Corporation  fell 0.1% at 1,368.90 rupees. The mortgage-lender's third-quarter profit rose 12% on-year, meeting analyst expectations.

Elsewhere in Asia, most markets including China, Hong Kong, and Taiwan were shut for the Lunar New Year holiday. Japan's Nikkei 225 index ended 0.5% lower.

--Dhanya Ann Thoppil

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