Indian Stocks Decline on Concern of Deepening Global Recession

Jan. 20 (Bloomberg) -- Indian stocks fell for the first time in three days after the U.K. widened a rescue plan for Royal Bank of Scotland Group Plc, sparking concerns that more lenders will need bailouts as the global recession deepens.

ICICI Bank Ltd., the nation’s second-largest bank, and HDFC Bank Ltd, the third-biggest, both declined the most in more than a month.

“RBS shook us up again,” said Shashank Khade, who helps manage $400 million at Kotak Securities Ltd. in Mumbai. “It shows that the rot is much deeper and the downside each bank faces has not been estimated properly.”

The Bombay Stock Exchange’s Sensitive Index, or Sensex, retreated 229.02, or 2.5 percent, to 9,100.55. The S&P CNX Nifty Index on the National Stock Exchange fell 1.7 percent to 2,796.60. The BSE 200 Index slid 2 percent to 1,087.29. Nifty futures for January delivery declined 2 percent to 2,777.

RBS forecast a loss of as much as 28 billion pounds ($40 billion) this year, the biggest in British history.

ICICI fell 4 percent to 396.30 rupees, the lowest since Dec. 8. Housing Development Finance dropped 3.9 percent to 1,485.80 rupees. HDFC Bank Ltd., the No. 3 lender, fell 3 percent to 912.45 rupees, the lowest since Dec. 8. State Bank of India, the largest, slid 2.9 percent to 1,112.90.

Overseas funds sold a net 5.63 billion rupees ($116 million) of Indian stocks on Jan. 16, according to the nation’s stock market regulator.

The following were among the most active shares traded on the Bombay and National stock exchanges. Stock symbols are in parentheses after company names:

Power companies: NTPC Ltd. (NATP IN) India’s biggest power generator, rose 7.55 rupees, or 4.2 percent, to 185.95. Tata Power Ltd. (TPWR IN) the second-biggest, added 8.5 rupees, or 1.1 percent, to 768.55. Reliance Infrastructure Ltd. (RELI IN), an electricity generator and distributor, gained 16.05 rupees, or 3 percent, to 551.40. Power Grid Corp. (PWGR IN), India’s biggest electricity transmission company, jumped 8.75 rupees, or 11 percent, to 87. Neyveli Lignite Corp. (NLC IN), a power producer, jumped 10.05 rupees, or 13 percent, to 87.05.

India plans to increase the rate of return on equity for power projects in a bid to attract investments. The rate of return on equity will be raised to 15.5 percent from 14 percent, India’s electricity regulator said in a statement in New Delhi today. For projects completed on schedule, the rate of return on equity will be 16 percent, the regulator said.

MindTree Consulting Ltd. (MTCL IN) dropped 22.20 rupees, or 9.3 percent, to 216.80, its lowest since listing in March 2007. The Indian computer-services provider set up by former Wipro Ltd. executives said group profit in the three months ended Dec. 31 dropped 56 percent to 87.2 million rupees.

Polaris Software Lab Ltd. (POL IN) surged 10 rupees, or 29 percent, to 44.35, the most since Jan. 2008. The Indian software- services provider to customers such as Citigroup Inc. said profit in the quarter ended Dec. 31 rose 94 percent to 371.7 million rupees.

Maytas Infra Ltd. (MAY IN) dropped 5.55 rupees, falling for an eighth day by its 5 percent daily limit, to 105.40. India ordered its fraud office to probe two companies owned by the founders of Satyam Computer Services Ltd. as they may be linked to the $1 billion fraud at the software maker.

The Indian software maker at the center of a fraud investigation for overstating earnings has a “nexus” with Maytas Properties Ltd. and Maytas Infra, Prem Chand Gupta, Company Affairs Minister, said yesterday.

Satyam rose 1.35 rupees, or 5.3 percent, to 26.85.

Tata Communications Ltd. (TCOM IN) slid 15.3 rupees, or 3.3 percent, to 449.55. The phone company controlled by India’s Tata Group has acquired the 30 percent stake in Neotel Ltd. previously owned by South Africa’s Transnet Ltd. and Eskom Holdings Ltd.