* Indexes closes at lowest since January
* Outlook weak as rupee tumbles to record lows
* Telecoms hit ahead of ministry decision on auction
By Abhishek Vishnoi
Mumbai, May 23 (Reuters) - India's two main index fell on
Wednesday, closing at their lowest since January, as the rupee
hit a new record low below the psychologically key 56 level,
while global stocks continued to be routed because of fears
about the euro zone.
Telecom stocks such as Bharti Airtel were among
the big decliners ahead of Thursday's meeting by the telecom
ministry to decide on a controversial proposal from a regulatory
body to raise spectrum prices in an auction of mobile airwaves.
Traders expect more weakness ahead for Indian stocks, given
the rupee has dropped more than 13 percent since its 2012 peak
in February, underscoring an urgent need of major reforms to get
investors believing again in the India story.
The rupee dropped to a record low of 56.225 to the
dollar amid renewed global risk aversion. Indian stocks and the
rupee tend to track each other's directions.
"There is lot of uncertainty in the market partly because of
European crises and partly because of inaction from of
government and Reserve Bank of India," said R.K Gupta, managing
director at Taurus Mutual Fund
India's main 30-share BSE index ended down 0.5
percent at 15,948.10 points, closing at its lowest since Jan. 9
and adding to the 1 percent loss it had clocked in previous
The broader 50-share NSE index, also known as Nifty,
fell 0.51 percent to 4,835.65 points, its lowest since Jan. 12.
Gupta added market valuations are turning attractive and
said he expected a recovery should the government address some
of the investor concerns about its fiscal challenges, including
about its spending.
Foreign flows to equities were slightly positive in May as
of Tuesday's close, but overseas investors were net sellers of
around 11 billion rupees worth in April.
Telecom stocks were among the big decliners ahead of the key
ruling on Thursday.
The 2G airwave auction must be completed by August after
India's top court ordered the cancellation of all cellular
permits awarded in a scandal-tainted 2008 sale process.
Idea Cellular fell 3.7 percent, while Reliance
Communications ended 1.8 percent lower.
Goldman Sachs downgraded Idea Cellular to "neutral" from
"buy" and Reliance Communications to "sell" from "neutral",
citing the regulatory overhang
Bharti Airtel dropped 4.4 percent, closing at its lowest
since July 2010, hit as well by fears about the impact from a
slumping rupee on its overseas debt exposure.
Among other decliners, Reliance Industries fell
0.6 percent after exploration partner Niko Resources said they
have abandoned the D4 oil and gas block off India's east coast,
underlining the production problems in the region.
India's auto shares fell on speculation the government could
raise fuel prices, adding to worries about a sector facing
uncertainty about future sales and rising raw material costs
because of the falling rupee.
Tata Motors 1.4 percent, while two wheeler Bajaj
Auto ended 1.3 percent lower.
India's Tata Power shares dropped 2 percent, a day
after the company posted a consolidated net loss of 6.3 billion
FACTORS TO WATCH
* Euro hits 21-month low vs dollar before EU summit
* Oil falls on potential Iran deal, economy concerns
* Doubts over EU crisis deal send shares,euro lower
* Foreign institutional investor flows
* For closing rates of Indian ADRs
ASIA-PACIFIC STOCK MARKETS:
Pan-Asia........ Japan....... S.Korea...
S.E. Asia....... Hong Kong... Taiwan...
Wall Street .... Gold .......
Currency.. Eurostocks..... Oil ........
JP bonds... ADR Report ..... LME metals.
US bonds.. Stocks News US.. Stocks News
DIARIES & DATA:
Indian Data Watch Asia earnings diary
U.S. earnings diary European diary
Indian diary Wall Street Week Ahead
Eurostocks Week Ahead
For top Asian company news, double click on:
U.S. company news European company news
Forex news Global Economy news
Technology news Telecoms news
Media news Banking news
Politics/General news Asia Macro data
A multimedia version of Reuters Top News is available at:
LIVE PRICES & DATA:
World Stocks Currency rates
Dow Jones/NASDAQ Nikkei
FTSE 100 Debt
Indian rupee LME
(Additional reporting by Manoj Dharra; Editing by Rafael Nam)