From Our Correspondent
MUMBAI — With investor confidence taking a hit after oil rose for a third day, fanning higher inflation and borrowing cost worries, Indian market fell 1.3 per cent yesterday to its lowest close in almost a week. The 30-share BSE Sensex dropped 185 points to 14,296.79, its lowest close since August 21. The 50-share NSE Nifty index fell 1.05 per cent to 4,292.10.

Software major Infosys Technologies bucked the trend, after the company said it was better positioned than other possible bidders for British consultancy Axon Group Plc because its offer had management backing. The stock rose 0.6 per cent to Rs 1,708, a day after easing 0.3 per cent on concern a bidding war could push up the acquisition cost and hurt earnings in the near term.

Financial stocks fell as oil climbed above $117 a barrel, triggering worries the Reserve Bank of India may again tighten monetary policy to douse inflation expectations. India imports about 70 per cent of its oil. "Investor confidence was shaken in late trade after oil started moving up faster," said a fund manager.

RUPEE: The Indian rupee gained as the central bank sold dollars for a second straight session after month-end demand for the US unit from oil firms threatened to push the rupee above 44 per dollar. The rupee ended at 43.71/72 per dollar, 0.3 per cent stronger than 43.84/85 at close on Tuesday when it hit a 17-month low of 44.26 during trade.

The rupee opened stronger but went down towards 43.92 due to month-end dollar demand from importers.  Then state-run banks came in and brought it up to 43.70 levels, said a dealer. Technically, it has the potential to test 43.50 in the near future. State banks are regularly seen in the currency market acting on behalf of the Reserve Bank of India to prevent volatility whenever there is any sharp move in the rupee. Oil is India's biggest import and refiners are the largest buyers of dollars in the local currency market. Demand for dollars tends to peak at month-end when firms have to make payments for their imports, which pressures the rupee lower.

BULLION: Gold and silver bounced back on the bullion market on renewed demand from stockists on expectation of good support in view of fast approaching festive season coupled with higher global advices. Standard gold (99.5 purity) shot up by Rs 200 per ten grams to Rs 11,895 from yesterday's closing level of Rs 11,695 and pure gold (99.9 purity) also hardened by Rs 205 per ten grams to Rs 11,970 from Rs 11,765. Silver ready (.999 fineness) jumped by Rs 295 per kilo to Rs 21,160 from Rs 20,865. Gold prices rose to $830.20/831.20 an ounce in Europe from $822.90/824.30 an ounce late in New york, tracking gains in oil prices, as the dollar retreated from the six-month high.