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Asia300

India shares fall to lowest in week as Infosys extends losses

MUMBAI (NewsRise) -- Indian shares fell for a second day on Monday, hitting their lowest level in more than a week, as Infosys extended losses after its chief executive officer quit in a surprise move.

The benchmark BSE Sensex fell 0.8%, or 265.83 points, to 31,258.85 while the broader Nifty 50 declined 0.8%, or 83.05 points, to end at 9,754.35. Both the indices have closed at their lowest level since August 11.

Infosys fell 5.4% to 873.50 rupees, taking its two-day declines to 14.5% after CEO Vishal Sikka resigned Friday. Sikka's sudden decision to leave Infosys eclipsed the company's announcement on Saturday to go for a 130 billion-rupees ($2.03 billion) share buyback as investors remain concerned about the management changes at India's second-biggest software services exporter.

Three U.S. law firms have begun preparations to file class action lawsuits on behalf of unnamed Infosys shareholders, Business Standard newspaper reported Monday, while several brokerages downgraded the stock and reduced their price targets.

HDFC Securities downgraded Infosys to Neutral with a target price of 995 rupees. "Our multiple is reduced to reflect the twin perils of internal corporate battles and a challenging business environment that the company will now have to navigate," HDFC said in a note.

"Investors do not like volatility in top level management of any company," said Akash Jain, vice president of equity research at Ajcon Global Services. "The markets are in for some correction going ahead after a sustained rally over the last few months, as lackluster June quarter earnings do not support valuations."

Meanwhile, the Nikkei Asia300 Index of large regional companies outside of Japan ended a tad lower amid worries over U.S. President Donald Trump's ability to implement his promised economic policies. Investors also look ahead to an annual central-banking symposium in Jackson Hole, Wyoming later this week.

Lack of fresh local triggers in the near term, and sustained withdrawal of money by foreign investors this month would continue to weigh on investor sentiment, analysts said.

Foreign portfolio investors have net sold local shares worth $1.48 billion so far this month until Aug. 18, National Depository Services' website showed.

Out of the 30 constituents on the BSE Sensex, 25 ended lower Monday. The number of declining stocks outnumbered advancing ones 1,724 to 863 while 157 remained unchanged.

Tata Consultancy Services, India's largest software exporter, added 0.3%, while Tech Mahindra advanced 0.6%. Both these stocks rose for the second consecutive session amid the management crisis at rival Infosys.

Most banks ended lower for the third day after outperforming other sector indices in this year's rally.

HDFC Bank, India's biggest lender by market value, declined 0.6%, while State Bank of India, the country's largest by advances, fell 1.4%. State-owned Punjab National Bank lost 3.2%. The bank has identified more cases for insolvency proceedings, reported BloombergQuint.

Tata Motors fell 1.6%. On Monday, the company unveiled a strategy to turnaround its loss-making local operations, including investing more than 40 billion rupees yearly on new products, divesting non-core assets, reducing costs and having a leaner managerial structure.

--Dhanya Ann Thoppil

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