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India stocks fall for second day on profit booking

MUMBAI (NewsRise) -- Indian stocks fell for a second day, taking the broader NSE index to close below the 10,000 level for the first time in two weeks, as investors continued to take profits.

Tuesday's losses also followed the Indian capital market regulator's move to impose trading restrictions on suspected shell companies listed in the country. On late Monday, the Securities and Exchange Board of India issued a statement to the stock exchanges to halt trading in 331 firms that it suspects to be shell companies. The restrictions include limiting trading in the affected companies to once a month and curbs in the trading of shares held by their promoters and directors.

The BSE Sensex fell 0.8%, or 259.48 points, to end at 32,014.19 points, while the broader NSE index slid 0.8%, or 78.85 points, at 9,978.55 points. Cigarette-maker ITC shed 2.1%, while the nation's largest lenders State Bank of India and ICICI Bank lost at least 1.7% each. Tata Steel rose 2.6% to a six-year high after upbeat June quarter earnings.

The Sensex and the NSE Index have risen to record levels many times in recent sessions, spurred by gains in global equities, earnings expectations and hopes of faster economic reforms at home. The benchmark index has advanced more than 20% year-to-date and remains one of Asia's top performing equity gauges in the period.

"Investors are taking profits and the banking sector is under pressure on weak earnings from state-run lenders," said Akash Jain, vice president, equity research at Ajcon Global Services. "Sentiment could be subdued as SEBI has banned trade in suspected shell companies."

Most other Asian markets were little changed as disappointing Chinese July trade data offset positive cues from Wall Street. The Nikkei Asia300 Index that tracks companies from over 11 economies from Asia ended up just 0.1%.

On Tuesday, 25 of the 30 Sensex constituents ended lower, while overall declining issues beat advancing ones 1984 to 60 while 123 remained unchanged.

Tata Steel advanced 2.6% to 615.75 rupees. The company said after market hours on Monday it swung to a profit in the first-quarter, helped by higher domestic sales volumes and improved performance at its European business. Axis Capital maintained its "buy" rating on the stock, with a target price of 690 rupees. The brokerage said it remains bullish on India's steel sector, as a definitive anti-dumping duty for the next four years will benefit large domestic steel mills.

Bharti Infratel declined 4% after Bharti Airtel, its holding company, announced the completion of a secondary sale of 67.53 million Infratel shares for over 25.70 billion rupees ($0.40 billion). Airtel shares were little changed.

Bajaj Auto gained 0.8% to 2,913.80 rupees. The two-and-three-wheeler maker announced a partnership with U.K.'s Triumph Motorcycles to develop a new range of motorcycles.

Hindalco Industries jumped 3.3% to 235.05 rupees after the aluminum producer's foreign arm Novelis reported a more than four-fold increase in June quarter net income.

Drug maker Lupin declined 1% to 974.45 rupees, extending Monday's 0.8% slide after Nomura cut its target price on the stock to 1,181 rupees from 1,491 rupees, even as it maintained its "buy" rating.

State-owned Life Insurance Corp. of India, which typically invests heavily in government divestments, will have to prune its stake in ITC and Larsen & Toubro to 15% in two years, the Economic Times reported, citing a senior Insurance Regulatory Development and Authority official. ITC lost 2.1%, while Larsen shed 0.7%.

Apollo Tyres declined 2.1% to 279.70 rupees after it jumped 8.9% yesterday amid reports New Delhi will likely impose anti-dumping duties on truck-and-bus radials from China. CIMB downgraded the stock and cut the target price to 224 rupees from 248 earlier. "Short-term relief from imposition of anti-dumping duty on China imports and refilling of dealer inventory may not sustain revival beyond a quarter," CIMB said.

Amara Raja Batteries declined 2.4% to 802.45 rupees after its first-quarter net profit fell 24% from a year earlier.

--Dhanya Ann Thoppil

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