Stocks in India Fall

India's Stocks Slide to Nine-Week Low as Investors Flee Risk

May 5 (Bloomberg) -- India's stocks fell, driving the benchmark index to a nine-week low, as investors sold riskier assets amid concern the European debt crisis is worsening and may derail the global economic recovery.

ICICI Bank Ltd., the country's second-biggest lender, declined for a third day. Reliance Industries Ltd., India's most valuable company, dropped as crude oil fell to the lowest in a week. Overseas investors sold a net 2.36 billion rupees ($53 million) of the nation's equities on May 3, the third day since Feb. 26 that they sold more shares than they bought.

"The mood is bearish," said D.K. Aggarwal, who manages funds for wealthy individuals as chairman of SMC Wealth Management Services Ltd. in New Delhi. "Globally, investors have turned risk averse and Indian markets are also getting impacted. They are booking profits as European debt concern might worsen." He declined to say how much he manages or what he's buying and selling.

The Bombay Stock Exchange's Sensitive Index, or Sensex, lost 136.33, or 0.8 percent, to 17,000.81 at 12:14 p.m. in Mumbai. The gauge is poised for its lowest close since March 5 after losing 3.2 percent this week. The S&P CNX Nifty Index on the National Stock Exchange fell 1 percent to 5,099.35. The BSE 200 Index retreated 0.9 percent to 2,161.27.

Commodities Slide

ICICI Bank declined 1.8 percent to 898.4 rupees. Reliance, owner of the world's largest refining complex, dropped 1.1 percent to 1,010.2 rupees.

The price of crude oil fell, extending yesterday's biggest slide since Feb. 4, after the dollar strengthened against the euro on concern Europe's debt crisis is spreading and Chinese manufacturing growth slowed, reducing the appeal of commodities to investors. The Dollar Index, which measures the U.S. currency against those of six major trading partners, rose to the highest in a year.

Sterlite Industries (India) Ltd., the nation's largest copper and zinc producer, dropped 4.7 percent to 739.5 rupees. The Reuters/Jefferies CRB Index of 19 raw materials fell 2.4 percent yesterday, the biggest slide since Feb. 5. Hindalco Industries Ltd., the biggest aluminum producer, lost 2.3 percent to 159.2 rupees. Tata Steel Ltd., the biggest producer of the alloy, declined 2.3 percent to 564.65 rupees.

Overseas Investors

The MSCI World Index lost 0.2 percent, extending yesterday's 2.6 percent slide. Declines yesterday wiped $1.1 trillion from the value of global equity markets, according to data compiled by Bloomberg.

India's stocks also fell after a report showed India's service industries expanded the most in 21 months in April, adding to pressure on the central bank to keep raising interest rates to quell the rate of inflation from a 17-month high.

Overseas investors have bought 303.1 billion rupees of Indian equities this year, according to the nation's market regulator. Most of the purchases came after the government's Feb. 26 budget, when Finance Minister Pranab Mukherjee pledged to cut the fiscal deficit and boost spending.

Inflows from overseas reached a record 834.2 billion rupees in 2009, exceeding the high set two years earlier in domestic currency terms, as the biggest rally in 18 years lured foreign funds. Overseas investors sold a record 529.9 billion rupees of shares in 2008, triggering a record annual decline.

The following were among the most active on the exchange:

Videocon Industries Ltd. (VCLF IN) sank 5.5 percent to 214.1 rupees. The oil explorer and consumer-electronics maker has been barred from doing business with the World Bank, the Financial Express newspaper reported, citing a notification from the lender. The company has asked for leniency from the World Bank, Videocon Chairman Venugopal Dhoot said today by telephone, confirming the report.

Syndicate Bank (SNDB IN) plunged 3 percent to 88 rupees. The state-owned bank's fourth-quarter profit fell for a third consecutive quarter, contracting 19 percent from a year earlier to 1.68 billion rupees.

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