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Asia300

India shares fall to one-month low as banking stocks slump

MUMBAI (NewsRise) -- Indian shares fell to a more-than-one-month low on Tuesday, led by losses in banking stocks, after a newspaper reported that the central bank has asked for higher provisioning for loans given to companies involved in bankruptcy proceedings.

The benchmark BSE Sensex fell 0.6%, or 179.96 points, to 30,958.25, while the broader NSE index declined 0.7%, or 63.55 points, to 9,511.40. Both the indices closed at their lowest levels since May 25. India's financial markets were shut on Monday for a public holiday.

State Bank of India, Axis Bank and ICICI Bank, among the nation's biggest lenders, contributed heavily to the losses on Tuesday, while mobile operator Bharti Airtel gained 1.6% and cigarette-maker ITC rose 0.3%.

The BSE Bankex fell 1.5% for its worst single-day performance in more than a month. The Reserve Bank of India asked lenders to provide for at least 50% of the loan amount as likely losses for all the companies referred for bankruptcy proceedings, the Economic Times reported, citing a communication sent by the monetary authority to banks on Friday. The news follows the RBI's move earlier this month to identify 12 of the nation's largest loan defaulters that creditors should pursue for bankruptcy proceedings.

"The government and the central bank's efforts to address non-performing assets have hit the banks' balance sheets," said Sundar Sanmukhani, head of fundamental research at Choice Broking. "The higher provisioning will impact banks' profits."

State Bank of India, the country's largest, fell 3.3% to 279.40 rupees. Axis Bank declined 2.3% to close at 492.80 rupees, while ICICI Bank finished 1.2% lower at 288 rupees.

Caution ahead of the implementation of the Goods and Services Tax is also weighing on some stocks, Sanmukhani said, without identifying a particular sector. The market is running ahead of fundamentals, he said, adding that a correction of about 5% is expected in the "near future."

New Delhi will implement the long-awaited nationwide GST on July 1 to replace a complex grid of indirect taxes on various goods and services.

Investor sentiment elsewhere in Asia was lackluster, with market participants awaiting a speech by the Federal Reserve Chair Janet Yellen for indications about further monetary tightening in the U.S. The Nikkei Asia300 Index of 316 influential companies in the region was little changed.

On the Sensex, 20 of the 30 constituents ended lower, while overall declining issues outnumbered advancing ones 1,881 to 711, with 180 ending unchanged.

Technology heavyweight Infosys fell 1.8% to 926.35 rupees.The company agreed to pay $1 million to settle an investigation into its visa violations in the New York state.

ITC added 0.3% to 311.75 rupees. Life Insurance Corp. of India defended its investment in ITC, saying there is no law or policy that stopped it from investing in tobacco companies. LIC was responding to a so-called public interest litigation filed against the insurer, Mint newspaper reported.

Bharti Airtel rose 1.6% to 371.80 rupees - its best single-session gain since May 16. The mobile operator plans to launch its Voice over Long-Term Evolution service in the July-September quarter, the Business Standard newspaper reported. The service allows 4G customers to make clearer and faster voice calls.

Oil & Natural Gas Corp. rose 1.2 % to 159.95 rupees after media reports about including natural gas in GST regime. The stock lost more than 5% last week amid lower crude oil prices.

--Dhanya Ann Thoppil

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