India's Stocks Fall for First Day in Three; Banks Lead Declines

March 20 (Bloomberg) -- India's benchmark stock index fell for the first day in three, led by ICICI Bank Ltd. and other financial services companies, on concern bad debts may rise, countering gains by commodity suppliers.

ICICI Bank, the nation's second-largest, dropped 4.4 percent, while bigger rival State Bank of India retreated 1.5 percent. Sterlite Industries (India) Ltd. climbed 1.1 percent, leading advances by commodity producers after metals gained.

"It's very difficult to ascertain non-performing assets at banks, so that uncertainty is raising concern on the quality of their loans," said R.K. Gupta, managing director of Taurus Asset Management Co. in New Delhi.

The Bombay Stock Exchange's Sensitive Index, or Sensex, fell 35.07, or 0.4 percent, to 8,966.68. The measure has dropped 7.1 percent so far this year, set for its fifth quarterly retreat, the longest losing streak in more than seven years.

The S&P CNX Nifty Index on the National Stock Exchange was unchanged at 2,807.05. The BSE 200 Index declined 0.3 percent to 1,053.03. Nifty futures for March delivery were little changed at 2801.65.

ICICI dropped 4.4 percent to 323.50 rupees. The bank had its share-price target reduced 10 percent at Macquarie Group Ltd., citing increased risk related to loan delinquencies. State Bank of India, the country's largest, declined 1.5 percent to 954.70 rupees. Axis Bank Ltd. slid 4.4 percent to 342.40 rupees.

Investors are concerned non-performing loans at banks and "asset quality" may deteriorate, Aditya Singhania, an analyst at Credit Suisse Group, said in a note dated yesterday.

Sterlite gained 1.1 percent to 316.80 rupees. Hindalco Industries Ltd., India's biggest aluminum producer, rose 5.7 percent to 47.65 rupees. Tata Steel Ltd., the nation's largest producer of the alloy, added 1.9 percent to 176.25 rupees.

A measure of six metals traded in London jumped 5.6 percent yesterday, while gold futures climbed in New York.

The following shares were among the most active on the exchange:

Akruti City Ltd. (AKCL IN) fell by a record 27 percent to 1,610.80 rupees. The National Stock Exchange will remove the nation's second-largest developer by market value from its derivatives segment by the end of this month. Trading in futures and options of the Mumbai-based company will be halted after March 26, the exchange said on its Web site yesterday, without providing a reason for the exclusion.

Dr. Reddy's Laboratories Ltd. (DRRD IN) fell 3.2 percent to 422.45 rupees. The nation's second-biggest drugmaker said yesterday it will exit some of the small distributor-driven generics markets, with an impact of less than 1 percent on revenue.

JM Financial Ltd. (JM IN) rose 10 percent to 22.10 rupees, after about 2.4 million shares changed hands in two transactions.

Larsen & Toubro Ltd. (LT IN) dropped 4 percent to 585.10 rupees. India's biggest engineering firm will pay four years of pending dividends to Grasim Industries Ltd. (GRASIM IN), the Business Standard reported, citing an order by the Bombay High Court. Grasim will receive 120 million rupees ($2.3 million) as dividends for the 3.85 million shares it holds in Larsen, and interest at the rate of 18 percent per annum, the newspaper said. Grasim added 0.2 percent to 1,464.60 rupees.

To contact the reporters on this story: Pooja Thakur in Mumbai at pthakur@bloomberg.net