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Indian shares fall as quickening inflation dashes December rate cut hopes

Larsen &Toubro, Tata Consultancy Services lead losses

MUMBAI (NewsRise) -- Indian shares fell for a third day on Tuesday after a choppy session, as quickening inflation dimmed hopes of a rate cut in 2017.

The Sensex slipped 0.3%, or 91.69 points, to 32,941.87, while the broader Nifty 50 declined 0.4%, or 38.35, to 10,186.60. Larsen & Toubro, India's largest engineering and construction company, lost 2.5%, while software services exporter Tata Consultancy Services declined 1.5%.

India's retail inflation edged up 3.58% in October from a year earlier, its fastest pace since March amid rising food and fuel prices, according to data released after markets closed on Monday. A separate set of data released on Tuesday showed wholesale inflation accelerated 3.59% last month.

India's Monetary Policy Committee will review interest rates next on Dec. 6.

"Chances of a rate cut are reduced," said Akash Jain, vice president, equity research at Ajcon Global Services. "Rising oil prices will make it a challenge for the current government to maintain its fiscal deficit targets."

Brent crude prices are hovering near two-and-a-half year highs. The Indian government's fiscal discipline hinges heavily on energy prices as the nation imports most of its crude oil requirements.

Jain said markets are expected to be "subdued" going ahead, but the overall picture still looks good for India, as July-September earnings have been better-than-expected for most companies.

The Nikkei Asia300 Index of regional companies outside of Japan fell 0.3%. Sentiment suffered after data showed China's industrial output rose 6.2% in October, slowing from September's 6.6% growth and missing the 6.3% uptick expected by analysts polled by Reuters. Retail sales grew a slower-than-expected 10% in Asia's largest economy last month.

As many 18 of the 30 Sensex constituents ended lower on Tuesday, while overall declining issues beat advancing ones 1,556 to 1,141 and 142 remained unchanged.

Financial stocks fell, with Housing Development Finance Corp. shedding 0.5% and the nation's largest lender State Bank of India losing 0.6%. HDFC Bank declined 0.7%.

Axis Bank gained 1.6% to 546.25 rupees. Nomura raised its target price to 640 rupees from 610 rupees and rated the stock a "buy," citing the bank's recent capital infusion from Bain Capital and Life Insurance Corp.

Sun Pharmaceutical Industries fell 1.2% ahead of its second-quarter earnings, due later Tuesday.

Bharti Airtel ended unchanged. India's biggest telecom company said Tuesday it had reduced its stake in tower unit Bharti Infratel to 53.51% after selling 83 million shares at 400.6 rupees each in the secondary market. Shares of Bharti Infratel closed 3.4% lower.

Adani Enterprises advanced 1.7%. The Indian energy and infrastructure company reported a 20% increase in consolidated income for the September quarter, while net income declined 6%.

Jet Airways fell 2.1%. The airline is in talks for ordering 75 more Boeing 737 Max aircraft after already ordering 75, Reuters reported, citing Chairman Naresh Goyal.

--Nivedita Naidu

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