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Monday, August 17, 2009

Indian Stocks Fall

Indian Stocks Fall Most in Six Weeks; Sterlite Leads Declines

Aug. 17 (Bloomberg) -- India's benchmark Sensex stock index fell the most in six weeks, led by Sterlite Industries (India) Ltd., after metal prices dropped on concerns a recent rally in commodities isn't justified by economic prospects.

Sterlite, the nation's biggest copper producer, retreated 7.1 percent as the metal declined for a second day in London, extending its slide from a 10-month high. Tata Steel Ltd., the largest maker of the alloy, lost 6.8 percent. Hindalco Industries Ltd., the No. 1 aluminum producer, retreated 7.5 percent. The Sensex tracked falls across Asian markets.

"Today the Indian stock market imitated the global markets," said Manish Sonthalia, a fund manager who helps oversee $100 million of equities at Motilal Oswal Securities Ltd. in Mumbai. "China's economy is primarily commodity based. So, a decline in the Chinese market led to a decline in commodities prices."

The Bombay Stock Exchange's Sensitive Index, or Sensex, fell 626.71, or 4.1 percent, to 14,784.92, the steepest decline since July 6. The gauge has dropped 5.7 percent so far this month on concerns the poorest monsoon rains in seven years will cut farm output and dent economic growth.

The S&P CNX Nifty Index on the National Stock Exchange lost 4.2 percent to 4,387.90. The BSE 200 Index decreased 4.1 percent to 1,812.57.

Sterlite fell 7.1 percent to 617.9 rupees. Tata Steel declined 6.8 percent to 437.95 rupees. Hindalco slid 7.5 percent to 100.25 rupees.

Copper Falls

Copper for three-month delivery fell $212, or 3.4 percent, to $6,033 a metric ton on the London Metals Exchange, leading declines in industrial metals, as stockpiles expanded and on concern that the doubling in prices since January no longer reflected the outlook for demand. Copper prices reached $6,480 on Aug. 14, the highest since Oct. 1.

July imports of copper into China, the world's biggest consumer, shrank 15 percent from a month earlier, according to the Beijing-based customs office, and foreign direct investment into Asia's second-largest economy fell for a 10th month.

"Metal prices have run ahead of fundamentals," said Niraj Shah, a Mumbai-based analyst at Centrum Broking Pvt. "The demand for metals is not as great as anticipated. Even in India, demand is likely to come down due to the weak monsoon rains."

Among other LME metals for three-month delivery, nickel fell 5.4 percent to $18,510 a ton, aluminum slid 2.5 percent to $1,940 a ton, and tin dropped 2.4 percent to $14,150 a ton. Lead fell 3.1 percent to $1,795 a ton and zinc declined 2.5 percent to $1,779 a ton.

Asia Declines

Asian stocks fell, dragging the MSCI Asia Pacific Index to its biggest drop in almost five months, on speculation economic growth in Japan and China will fail to meet investors' expectations.

Hero Honda Motors Ltd., the nation's biggest motorcycle maker, lost 6 percent to 1,389.75 rupees on concerns the weak monsoon will slash spending in the nation's agricultural regions. Forty percent of Hero Honda's sales come from rural demand. Mahindra & Mahindra Ltd., the largest maker of tractors, lost 5.4 percent to 747.45 rupees. Jaiprakash Associates Ltd., the biggest maker of dams, declined 6.4 percent to 202.7 rupees.

Overseas funds bought a net 9.37 billion rupees ($194.7 million) of Indian stocks on Aug. 13, the Securities & Exchange Board of India said on its Web site. The funds have bought 365.7 billion rupees of Indian stocks this year to date, compared with record net sales of 530 billion rupees for the whole of 2008.

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

Bharti Airtel Ltd. (BHARTI IN) fell 2.5 percent to 398.75 rupees. MTN Group Ltd. is pushing India's largest mobile-phone operator to raise its offer for the South African company by more than $1 billion, the Wall Street Journal reported on Aug. 14, citing people familiar with the situation.

Indian Oil Corp. (IOCL IN) climbed 0.3 percent to 569.45 rupees. The nation's largest refiner increased jet fuel prices by 4.55 percent from Aug. 16, a company official said. The price in Mumbai, home to the country's busiest airport, was raised to 39,830 rupees a kiloliter from 38,097.77 rupees, the official said.

To contact the reporter on this story: Rajhkumar K Shaaw in Mumbai at rshaaw@bloomberg.net .





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