Sensex falls to 3-week low tracking regional markets

MUMBAI (Reuters) - India's stock markets fell to their lowest level in three weeks on Wednesday along with other Asian markets as China allowed the yuan to weaken further, stoking fears that the world's second-biggest economy could be even weaker than feared.

China has guided the yuan lower since a surprise devaluation of the currency last summer, rattling traders who fear it could eventually set off a round of competitive devaluations which will put further pressure on other emerging economies.

"Sentiment is bearish because of data from China and U.S. The market is ripe for a fall," said Alex Mathews, head of research at Geojit BNP Paribas.

 

The broader NSE Nifty was 0.5 percent lower at 2.52 p.m. after hitting its lowest level since December 16.

The benchmark BSE Sensex was down 0.51 percent at 2.52 p.m. after falling to its lowest level since December 15.

Auto stocks continued to be under pressure with mixed December sales numbers and a ban on sales of large diesel vehicles in the capital.

Tata Motors fell 1.8 percent, Mahindra and Mahindra dropped 1.6 percent and Maruti Suzuki declined 1.5 percent.

ITC and ICICI Bank were the biggest drags on the Nifty, with a drop of 2.6 percent and 2.4 percent, respectively.

The only bright spot was Narayana Hrudayalaya whose shares jumped 36.6 percent on their market debut.

(Reporting by Karen Rebelo in Mumbai; Editing by Subhranshu Sahu)