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India shares suffer worst fall in two months amid worries over global growth

Maruti Suzuki, Tata Motors, Reliance Industries pace losses

MUMBAI (NewsRise) -- Indian shares posted their biggest fall in almost two months on Thursday amid losses in regional equities and U.S. stock futures as concerns mounted over the global growth outlook.

The BSE Sensex fell 1.6% to 35,312.13 and the broader Nifty 50 Index declined 1.7% to 10,601.15. The sell-off was broad based, with 29 out of the Sensex's 30 constituents ending lower and 46 of the Nifty's 50 stocks closing in the negative territory. Automakers Maruti Suzuki India and Tata Motors were the biggest losers in percentage terms, falling by 4% or more. Kotak Mahindra Bank paced losses among lenders, shedding 2.5%, while Reliance Industries was the largest contributor to the Sensex's losses with a 2.7% decline.

Indian equities opened on a weak note and maintained losses through the session on Thursday. It was a difficult day for other regional equities as well, and indications were that Wall Street was likely to add to the more than 3% losses incurred on Tuesday. Equity index futures on the S&P 500 suggested a more than 1.5% pullback on the benchmark index when U.S. markets reopen after Wednesday's holiday.

Concerns over the economic outlook amid a flattening U.S. yield curve have been blamed for Tuesday's selloff on Wall Street and for the back-to-back losses on regional equity indexes. The difference between the 10-year U.S. yield and the 2-year benchmark narrowed further on Thursday to new multiyear lows. The falling yield differential between long-end and short-tenure U.S. bonds is considered a sign of a looming economic slowdown.

Further hurting demand for risk assets on Thursday was the arrest of the Chief Financial Officer of a major Chinese technology company, by Canadian authorities, possibly for extradition to the U.S. Reuters reported, citing a person familiar with the matter, that the arrest was related to violations of U.S. sanctions.

Analysts said that the arrest of Huawei CFO Meng Wanzhou, which comes only a few days after China and U.S. agreed to a temporary pause in their trade conflict, risks shifting attention back to the already troubled relationship between the two nations.

"Capital markets had a rough day, as they are trying to navigate too many data points such as re-emergence of the sharp weakness in the rupee, upcoming OPEC meeting, and results of the five state assembly elections," said Jagannadham Thunuguntla, senior vice president and head of research (wealth) at Centrum Broking.

In other major movers on the BSE on Thursday, Aurobindo Pharma fell 5.7%. The Business Standard newspaper reported that the company faces a class action suit in the U.S. related to a blood pressure drug.

Siemens climbed 1.9% after the shares were upgraded to 'outperform' by Macquarie, citing improving business mix and expected margin recovery.

Oil and Natural Gas Corp. dropped 2.5% and shares of fuel retailers struggled before a closely watched meeting of the Organization of the Petroleum Exporting Countries. Analysts expect the group to cut crude oil output in the face of a near one-third decline in prices over the last two months.

Most software providers struggled as a more than 1% decline in futures of the Nasdaq Composite outweighed the fall in the rupee to near 71 to a dollar. HCL Technologies fell 3.7% and Tech Mahindra ended 3.8% lower.

--Nimesh Vora

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