Daiichi's exit from Sun Pharma hits rupee, stocks

The rupee fell to a three-and-a-half month low on Tuesday and stocks sank to their lowest in nearly four weeks on concerns about foreign outflows after Japan's Daiichi Sankyo 's $3.6 billion share sale in Sun Pharmaceutical Industries.

Daiichi Sankyo began the sale late on Monday, according to a person directly involved in the deal and a marketing term sheet seen by Reuters.

Worries over retrospective taxation on foreign portfolio investors prompted them to sell stocks worth Rs 1507 crore($239.93 million) on Monday, also weighed on sentiment.

"Daiichi's share sale is having some impact but the underlying trend has weakened due to equity-led worries around Jan-March earnings and retrospective taxes on profits of foreign investors," said Subramanian Sharma, director at Greenback Forex.

The rupee should trade between 62.50 to 63.80 in the near term, he added.

The partially convertible rupee pared some of its earlier losses to trade at 62.85/86 after earlier falling to 63.1550 per dollar, its lowest since Januuary 8.

However, it was not clear whether the entire $3.6 billion in the Daiichi deal would flow out of India or if some of the money would be reinvested with domestic investors including Sun Pharma.

The broader 50-share Nifty was down 0.1 per cent after earlier falling as much as 0.8 per cent to its lowest since March 30.

Sun Pharma shares slumped as much as 10.9 per cent, heading towards their biggest daily fall since June 2009.

The stock was down 8 per cent at 2:14 pm.

(Reuters)