Indian Stocks Fall Most in Two Week on Global Recovery

June 7 (Bloomberg) -- India’s stocks fell, snapping a three-day rally, as investors withdrew funds from riskier assets amid concern Europe’s sovereign-debt crisis will slow a global economic recovery.

DLF Ltd., India’s biggest developer, dropped the most in four months. Reliance Industries Ltd., the nation’s most valuable company, retreated to the lowest in almost two weeks. A rebound in the global economy faces “significant challenges,” Group of 20 finance chiefs said over the weekend.

“This bumpy ride is likely to continue for some more time because the global economy is under threat,” said Deven Choksey, chief executive officer at K.R. Choksey Shares & Securities in Mumbai, who manages about $123 million for wealthy individuals.

The Bombay Stock Exchange’s Sensitive Index, or Sensex, declined 410.35, or 2.4 percent, to 16,707.34 at 11:52 a.m. in Mumbai, poised for its steepest drop since May 25. The S&P CNX Nifty Index on the National Stock Exchange lost 2.2 percent to 5,021.30. The BSE 200 Index retreated 2 percent to 2,129.97.

DLF sank 6 percent to 264.85 rupees, heading for its worst decline since Jan. 27. Reliance dropped 2.2 percent to 1,008.85 rupees, its lowest level since May 26.

Investors are worried that the “global economy is going to decelerate as fiscal stimulus wears off,” said Ivan Leung, Hong Kong-based chief investment strategist at JPMorgan Private Bank. “It may not be time to add risk.”

Wipro, Sterlite

Tata Consultancy Services Ltd., the biggest software- services exporter, retreated 1.8 percent to 751.5 rupees. Infosys Technologies Ltd., the No. 2, dropped 2.3 percent to 2,665.05 rupees, while Wipro Ltd., the third-biggest, dropped 1.9 percent to 643 rupees. The companies derive about a fifth of their sales in Europe.

Sterlite Industries (India) Ltd., India’s largest copper producer, dropped 3.9 percent to 623 rupees. Hindalco Industries Ltd., the biggest aluminum producer, lost 4.9 percent to 140.4 rupees. Tata Steel Ltd., the biggest producer of the alloy, decreased 3.4 percent to 468.75 rupees.

A gauge of raw-material producers in the MSCI Asia Pacific Index slumped 4.1 percent, the second-most of 10 industry groups, after commodity prices extended declines from June 4. Copper futures in New York sank as much as 3.1 percent, while crude dropped as much as 2.8 percent.

‘Grave Situation’

India’s rupee slid as much as l.4 percent per dollar, the lowest since May 26, on speculation fund outflows from local stocks will accelerate as investors shun emerging market assets. The currency may slip 2.4 percent this year to the lowest since September as funds favor safer investments, Mohan Shenoi, head of Treasury at Kotak Mahindra Bank Ltd. in Mumbai, said in a June 4 interview.

The MSCI Asia Pacific Index retreated as much as 3.5 percent today, set for its biggest decline since March 30, 2009. The gauge has slumped 15 percent from its high this year on April 15 amid growing concern the Greece-triggered sovereign debt crisis is spilling over to other European nations.

Hungary’s economy is in a “very grave situation” and it is “no exaggeration” to talk about a default, Peter Szijjarto, a spokesman for the Hungarian Prime Minister, said June 4. State Secretary Mihaly Varga said the next day that comments about a possible default are “unfortunate.”

Finance Minister Pranab Mukherjee said June 4 that India’s economy will be hurt should the sovereign debt crisis that originated in Greece spread in Europe.

Overseas investors bought a net 4.93 billion rupees ($106 million) of Indian stocks June 3, increasing total purchases of the equities this year to 212.6 billion rupees, according to the nation’s market regulator.

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.

The following were among the most active on the exchange:

Container Corp. of India Ltd. (CCRI IN) decreased 2.3 percent to 1,269.7 rupees. The state-controlled freight-train operator was cut to “neutral” from “overweight” by Aditya Makharia, an analyst at JPMorgan Chase & Co., who said margin expansion may be restricted even as the company benefits from reviving growth in foreign trade.

Reliance Communications Ltd. (RCOM IN) climbed 1.8 percent to 171.65 rupees. The board of India’s second-largest wireless carrier approved the sale of a 26 percent stake valued at 90.5 billion rupees to help pay debt and upgrade networks, the Mumbai-based company said yesterday.

Shree Renuka Sugars Ltd. (SHRS IN) lost 3.9 percent to 60.9 rupees. The company failed to agree on the purchase of Brazilian sugar maker Equipav SA Acucar & Alcool after a shareholder declined to sign the deal, O Estado de S. Paulo reported, citing unnamed bankers involved in the talks.

Shree Renuka Sugars’ Managing Director Narendra Murkumbi wasn’t immediately available at his office telephone for comment on the report.