MARKET EYE- Indian shares on way to biggest single-day fall in nearly 16 months

* India's main BSE index falls 2.5 percent, while the

broader NSE index is 2.6 percent lower, heading towardstheir biggest single-day percentage fall since Feb. 27, 2012.* Bonds, shares and commodities fell sharply around the world onThursday and the dollar rose after the U.S. Federal Reserveexplicitly signalled an end to easy money and data showedChina's economy slowing.
* The Indian rupee slumped to a record low on Thursday, whilestocks and bonds were hit, after the Fed signalled a tapering ofits monetary stimulus, highlighting the country's dependence onforeign capital inflows to fund its current account deficit. * Shares of large-cap private banks fall as traders fear thathigh foreign holding in these stocks makes them more vulnerable,as a sell-off after the Federal Reserve signalled an eventualend to free money.
* ICICI Bank Ltd, with 37.94 percent FII holding,falls 4 percent, while HDFC Bank, where FIIs hold34.07 percent of total shares, is down 3.9 percent.
* Traders also worry an end to the U.S. monetary stimulus couldlead to portfolio outflows, pushing the rupee lowerand, in turn, delaying any rate cuts from the central bank.

Rupee at record low as India seen lacking options to brake fall

(Reuters) - A top official said the government has options to stem a fall in the rupee but did not offer any specifics, turning the focus on the RBI to stem a rout that sent the rupee to record lows and bond yields surging on Thursday.

The rupee, the worst Asian performer on Thursday in a global market sell-off, was instead supported by the Reserve Bank of India, which stepped in to sell dollars after it slumped to a record low of 59.9350 against the dollar, traders said.

Yet, traders said the RBI's firepower was likely to be limited given it has foreign exchange reserves of $290 billion, only enough to cover imports for seven months.

The mixed government messages and a cautious RBI are exacerbating the perceived vulnerability of a country suffering from a record-high current account deficit in the midst of a global downturn sparked by potential tapering in U.S. monetary stimulus and a weakening Chinese economy.

"Both the willingness and ability appear to be limited for the government," said Samiran Chakrabarty, head of research at Standard Chartered Bank in Mumbai.

"The RBI is also favouring relative free movement of the currency," he added.

The rupee has been among the top decliners in emerging currencies since May due to a current account deficit that hit a record 6.7 percent of gross domestic product in the October-December quarter. It was last trading at 59.82/81 from its 58.71/72 close on Wednesday.

Narendra Modi to visit Ayodhya, pray at disputed site

AYODHYA: In a move having big political significance, Gujarat chief minister Narendra Modi will visit Ayodhya this week and will also offer prayer at the disputed site.

Ashok Singhal, Praveen Togadia, Gorakhpur MP Yogi Aditya Nath and yoga guru Ramdev will be reaching the town tomorrow to welcome Modi, said Sharad Sharma UP spokesman of VHP.

Sharma said that the Gujarat chief minister, who is expected to visit Ayodhya on Wednesday or Friday, will also visit the Ram temple.

VHP has also called a meeting of Hindu saints who have played active roles in Ram temple movement in 1990s, he said.

"Modi's message to his party men and electorate from the land of Ayodhya will be important in the coming elections," the VHP leader said.

Modi will also meet top VHP saints in Ayodhya, including the president of Ram Janam Bhumi Nyas Trust Mahant Nritya Gopal Das.

This will be the first visit of Modi to Ayodhya temple after demolition of the disputed structure.

According to the sources he visited Ayodhya in 1998 with Lal Krishna Advani, but did not visit the shrine.

"Modi's move towards Ayodhya is also an indication that the Hindutva forces are seriously considering him as the PM candidate for general election," the VHP leader said.

His visit implies that the BJP, which had dropped the Ram temple issue in the last Lok Sabha elections, would rake it up this time.

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