May 26 (Bloomberg) -- Indian stocks fell the most in a month on concerns the new government will have to borrow more to boost the economy. Bharti Airtel Ltd. dropped for a second day after a proposal to buy a South African company.
Larsen & Toubro Ltd. and Jaiprakash Associates Ltd. led infrastructure stocks lower after an official said the government would have to borrow heavily to pay for stimulus measures that include the construction of new public works.
"There is a lot of expectation built around the new stimulus package, but where will the government bring the money from?" said Shashank Khade, who helps manage $300 million in assets at Kotak Securities Ltd. in Mumbai. He added the government would need to raise more debt or sell state assets.
The Bombay Stock Exchange Sensitive Index, or Sensex, declined 323.99, or 2.3 percent, to 13,589.23, its steepest drop since April 28. The S&P CNX Nifty Index on the National Stock Exchange dropped 2.9 percent to 4,116.70. The BSE 200 Index lost 2.7 percent to 1,652.41.
The Sensex will probably trade in the 12,500 to 15,000 range in the next three months, Khade added.
India may borrow more than the planned 360 billion rupees ($7.6 billion) next month should the government need additional funds to finance relief measures, said a finance ministry official with direct knowledge of the budget.
Prime Minister Manmohan Singh's government, which won a second five-year term this month, is borrowing more to fund three stimulus packages to revive growth in Asia's third-largest economy, forecast by the central bank to expand at the slowest pace in seven years.
Budget Decision
The Ministry of Finance hasn't decided on the borrowing for June, though it may raise more from the market after consultations with the Reserve Bank of India, said the official, who declined to be identified.
Larsen and Toubro, India's biggest engineering company, fell 4 percent to 1,252.80 rupees. Jaiprakash, the nation's largest builder of dams, lost 4 percent to 178.45 rupees.
Bharti Airtel, India's No. 1 mobile-phone operator, slid 4.8 percent as analysts, including Nishna Biyani at Prabhudas Lilladher Pvt., estimate the company may need to raise as much as $4 billion in cash to buy MTN Group Ltd.
Bharti fell to 771.20 rupees, extending yesterday's 5.7 percent slide. The company said yesterday it's in talks to buy 49 percent of South Africa's MTN Group, the first step in a potential $23 billion merger.
The Indian company is offering 86 rand ($10.31) in cash and half a Bharti share for each MTN stock, the New Delhi-based company said. The Johannesburg-based company and its shareholders may buy 36 percent of Bharti.
'Negative' Deal
Vikash Mantri, an analyst with ICICI Securities Ltd. in Mumbai, said the proposed transaction is "negative in the near term" because it will dilute earnings per share.
"Trying to combine an Indian operator with an operator with 21 countries isn't going to be easy," Theo Maas, who helps manage $3.5 billion at Fortis Investment Partners in Sydney, said by telephone. "That was my worry last year and it's still my worry now." Fortis owns shares in Bharti.
The following stocks were among the most active on the exchange:
National Aluminium Co. (NACL IN) dropped 2.8 percent to 337.65 rupees. India's second-biggest producer lowered prices of the metal by as much as 5 percent to match a drop in global rates.
Reliance Communications Ltd. (RCOM IN) slid 9.6 percent to 291.40 rupees. India's second-largest mobile-phone operator's relative strength index, measuring how fast prices rose or fell during the specified period, has been above 70 since May 18. Some investors regard a reading at 70 and above as a signal to sell.
Ranbaxy Laboratories Ltd. (RBXY IN) dropped 8.4 percent to 244.50 rupees. The country's largest drugmaker had jumped 21 percent yesterday after its chief executive quit. Its relative strength index was above 70 yesterday.
Sterlite Industries (India) Ltd. (STLT IN) added 0.4 percent to 539.95 rupees. The No. 1 copper producer rose after Rio Tinto said it anticipated a "V-shaped" recovery in China, the world's top metals consumer.
To contact the reporters on this story: Rajhkumar K Shaaw in Mumbai at rshaaw@bloomberg.net .
Larsen & Toubro Ltd. and Jaiprakash Associates Ltd. led infrastructure stocks lower after an official said the government would have to borrow heavily to pay for stimulus measures that include the construction of new public works.
"There is a lot of expectation built around the new stimulus package, but where will the government bring the money from?" said Shashank Khade, who helps manage $300 million in assets at Kotak Securities Ltd. in Mumbai. He added the government would need to raise more debt or sell state assets.
The Bombay Stock Exchange Sensitive Index, or Sensex, declined 323.99, or 2.3 percent, to 13,589.23, its steepest drop since April 28. The S&P CNX Nifty Index on the National Stock Exchange dropped 2.9 percent to 4,116.70. The BSE 200 Index lost 2.7 percent to 1,652.41.
The Sensex will probably trade in the 12,500 to 15,000 range in the next three months, Khade added.
India may borrow more than the planned 360 billion rupees ($7.6 billion) next month should the government need additional funds to finance relief measures, said a finance ministry official with direct knowledge of the budget.
Prime Minister Manmohan Singh's government, which won a second five-year term this month, is borrowing more to fund three stimulus packages to revive growth in Asia's third-largest economy, forecast by the central bank to expand at the slowest pace in seven years.
Budget Decision
The Ministry of Finance hasn't decided on the borrowing for June, though it may raise more from the market after consultations with the Reserve Bank of India, said the official, who declined to be identified.
Larsen and Toubro, India's biggest engineering company, fell 4 percent to 1,252.80 rupees. Jaiprakash, the nation's largest builder of dams, lost 4 percent to 178.45 rupees.
Bharti Airtel, India's No. 1 mobile-phone operator, slid 4.8 percent as analysts, including Nishna Biyani at Prabhudas Lilladher Pvt., estimate the company may need to raise as much as $4 billion in cash to buy MTN Group Ltd.
Bharti fell to 771.20 rupees, extending yesterday's 5.7 percent slide. The company said yesterday it's in talks to buy 49 percent of South Africa's MTN Group, the first step in a potential $23 billion merger.
The Indian company is offering 86 rand ($10.31) in cash and half a Bharti share for each MTN stock, the New Delhi-based company said. The Johannesburg-based company and its shareholders may buy 36 percent of Bharti.
'Negative' Deal
Vikash Mantri, an analyst with ICICI Securities Ltd. in Mumbai, said the proposed transaction is "negative in the near term" because it will dilute earnings per share.
"Trying to combine an Indian operator with an operator with 21 countries isn't going to be easy," Theo Maas, who helps manage $3.5 billion at Fortis Investment Partners in Sydney, said by telephone. "That was my worry last year and it's still my worry now." Fortis owns shares in Bharti.
The following stocks were among the most active on the exchange:
National Aluminium Co. (NACL IN) dropped 2.8 percent to 337.65 rupees. India's second-biggest producer lowered prices of the metal by as much as 5 percent to match a drop in global rates.
Reliance Communications Ltd. (RCOM IN) slid 9.6 percent to 291.40 rupees. India's second-largest mobile-phone operator's relative strength index, measuring how fast prices rose or fell during the specified period, has been above 70 since May 18. Some investors regard a reading at 70 and above as a signal to sell.
Ranbaxy Laboratories Ltd. (RBXY IN) dropped 8.4 percent to 244.50 rupees. The country's largest drugmaker had jumped 21 percent yesterday after its chief executive quit. Its relative strength index was above 70 yesterday.
Sterlite Industries (India) Ltd. (STLT IN) added 0.4 percent to 539.95 rupees. The No. 1 copper producer rose after Rio Tinto said it anticipated a "V-shaped" recovery in China, the world's top metals consumer.
To contact the reporters on this story: Rajhkumar K Shaaw in Mumbai at rshaaw@bloomberg.net .
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