Sensex closes at two-week low; earnings, RBI on watch

By Abhishek Vishnoi

MUMBAI (Reuters) - The BSE Sensex fell nearly 1.5 percent on Thursday to their lowest close in nearly two weeks as ITC slumped after missing its quarterly sales forecast, and Hindustan Unilever dropped a day ahead of its results.

Ambuja Cements and ACC also fell after their Switzerland-based owner Holcim announced a complex restructuring of its Indian units that was seen by some analysts as detrimental to minority shareholders.

The market was also choppy as July derivative contracts expired at the end of the session. The week was marked by volatility, with the Sensex rising to a 2-1/2 year high on Tuesday, but slumping since then on the RBI's additional cash-draining measures to support the rupee.

 

The Reserve Bank of India's steps such as capping individual banks' borrowing from itself has sent bond yields surging, raising concerns about higher borrowing costs for banks and companies. The measures also come ahead of its policy review on Tuesday.

"Nifty can fall till the 5,800 level if RBI announces more measures to stem the rupee's slide on or before policy day," said Vivek Mahajan, head of research at Aditya Birla Money.

The Sensex fell 1.42 percent, or 285.92 points, to end at 19,804.76, marking its biggest single day fall since July 3.

The Nifty lost 1.39 percent, or 83 points, to end at 5,907.50, falling for a second day.

Shares in ITC , India's largest cigarette maker,

fell 4.5 percent after sales missed forecasts on lower-than-expected volume growth in the cigarette segment, dealers said.

Consumer goods maker Hindustan Unilever fell 3 percent on profit-taking a day ahead of its June-quarter earnings. It touched an all-time high of 725 rupees on Wednesday.

Hindustan Unilever was also hit after its parent Unilever reported underlying sales growth of 5 percent for the second quarter, just shy of market expectations, and said growth was slowing in emerging markets.

Technology company Wipro fell 4.1 percent a day ahead of its June-quarter results.

Ambuja Cements slumped 10.6 percent, after several brokerages, including Bank of America-Merrill Lynch and Religare Institutional Research, downgraded the stock on news of its restructuring.

Among stocks that gained, Hero MotoCorp gained 4.2 percent after its adjusted operating margins for the June quarter beat estimates.

(Editing by Prateek Chatterjee)