India's Stocks Fall to Two-Month Low on Global Slowdown Concern

India's stocks fell to the lowest in more than two months after a rout in U.S. equities on concern Europe's debt crisis will spread and hurt the global recovery.

State Bank of India, the nation's biggest lender, lost the most in more than three months. Sterlite Industries (India) Ltd., a copper and zinc producer, declined to an eight-month low.

"Risk aversion is rising and emerging market equities are considered risky," said Apurva Shah, the Mumbai-based head of research at Prabhudas Lilladher Pvt. "When things move so much globally, India cannot be isolated."

The Bombay Stock Exchange's Sensitive Index, or Sensex, fell 218.42, or 1.3 percent, to 16,769.11. The gauge declined 4.5 percent this week, its worst weekly performance in more than six months. The S&P CNX Nifty Index on the National Stock Exchange lost 1.4 percent to 5,018.05. The BSE 200 Index retreated 1.8 percent to 2,127.07.

Reliance Industries Ltd., the refiner that makes up 13 percent of the Sensex, rose the most in four weeks after the nation's Supreme Court ruled in its favor in a gas dispute.

State Bank lost 3.7 percent to 2,226.15 rupees. Sterlite tumbled 3.6 percent to 713.85 rupees, its lowest since Sept. 7.

Tata Motors Ltd., the owner of Jaguar Land Rover Ltd., plunged 6.2 percent to 762.75 rupees. DLF Ltd., the nation's largest developer, dropped 4.5 percent to 284.65 rupees.

Global Rout

Australia's central bank warned that an escalation of Europe's debt woes may cause a "sharp" global economic slowdown and the Bank of Japan mounted the biggest one-day injection of cash since 2008 as stocks tumbled worldwide.

U.S. equities sank as waves of computerized trading exacerbated a selloff triggered by Europe's debt crisis, sparking a slide in Asian shares. The rout briefly erased more than $1 trillion in U.S. market value.

Reliance Industries surged 2.5 percent to 1,032.8 rupees. India's Supreme Court ruled in favor of the company controlled by billionaire Mukesh Ambani in a gas-price dispute with Reliance Natural Resources Ltd., a company controlled by his brother, according to the judgment in New Delhi today. The court ordered the brothers to renegotiate a deal based on government policy on gas utilization.

Anil Ambani Companies

Companies controlled by Anil Ambani tumbled. Reliance Natural sank 23 percent to 52.65 rupees, its steepest decline since January 2008. Reliance Power Ltd. dropped 8.9 percent to 140.2 rupees, Reliance Infrastructure Ltd., fell 7.4 percent to 978.45 rupees. Reliance Communications Ltd. retreated 2.1 percent to 153.25 rupees, and Reliance MediaWorks Ltd. lost 6.2 percent to 186.85 rupees.

Overseas investors sold a net 13.9 billion rupees ($305 million) of Indian equities yesterday, paring their total purchases of stocks this year to 290.2 billion rupees, according to the nation's market regulator.

Average daily purchases of Indian equities by overseas investors slowed to a net $71 million in the month ended May 5 from $221 million in the previous 30 days, according to data released by the Securities and Exchange Board of India. Foreigners sold local shares worth $310 million more than they bought on May 5, the most in three months.

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. They sold a record 529.9 billion rupees of shares in 2008, triggering a record annual decline.

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

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