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Equities

India shares extend losses as fuel retailers, blue chips decline

Uncertainty after Karnataka state polls, rising US yields also damp investor enthusiasm

MUMBAI (NewsRise) -- Indian shares extended losses on Thursday, weighed by the decline in heavyweights and fuel retailers.

The BSE Sensex fell 0.7% to 35,149.12 and the Nifty 50 Index declined 0.5% to 10,682.70. Bharat Petroleum slipped 1.9% and Indian Oil slid 0.9% as Brent crude oil prices crossed the $80 per barrel. Heavyweights ITC fell 2.4% and Housing Development Finance Corp. declined 2.1%, the biggest contributors to the Sensex's losses. Tata Steel slipped 1.9% following its March quarter earnings. Hindalco Industries dropped 2.8%, extending losses from Wednesday after it reported a 25% fall in net profit during the last quarter.

The risk posed by rising U.S. bond yields continued to weigh on the outlook for regional markets, including India. Also, with India importing more than two-third of its oil requirements, higher energy prices adversely affect real incomes and spending, which in turn hurt economic outlook.

U.S. 10-year bond yields rose for the third straight day on Wednesday, climbing to fresh seven-year highs. Most regional markets ended lower, led by South Korea and China. The Nikkei Asia300 Index of companies outside Japan dropped 0.5%.

Sageraj Bariya, vice president of institutional sales at Mumbai-based East India Securities, said the rise in U.S. yields "suggested more competition for equities" and global markets remained on a "shaky ground." He added that higher U.S. interest rates will particularly "not go down well" for emerging markets.

Meanwhile, uncertainty on the political front continued. After the governor of Karnataka state invited the Bharatiya Janata Party to form a government, rival Indian National Congress approached the country's top court challenging the move.

Tuesday's election results in the southern state had thrown up a hung verdict with no party attaining a simple majority. Congress contended that since it along with a local party had cobbled up an alliance and had the requisite majority, the BJP should not have been given the first chance to form the government.

Bariya added that "uncertainty in government formation in Karnataka" added to the day's cautious tone.

Among other movers, TVS Motor fell 3.5%, adding to its Wednesday's losses after March quarter earnings missed estimates. Nomura, Macquarie, and Morgan Stanley slashed their target price on the two-wheeler company's stock by up to 11%.

Bajaj Finance advanced 7.8% after its March quarter net profit beat expectations. Bajaj Auto dropped 0.9%% before its earnings due on Friday.

Reliance Communications soared 56.9% after television channel BTVI reported that the company and Sweden's Ericsson have informed the country's bankruptcy court that they are in settlement talks. Shares of Reliance Communications had plunged on Wednesday after India's bankruptcy court admitted an insolvency petition by Ericsson against the company and two of its subsidiaries.

--Nimesh Vora

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