Sensex at one-week low amid widening 2G probe

Sensex at one-week low amid widening 2G probe

Mumbai: India’s stocks fell for a second day on Wednesday, with the benchmark index dropping to its lowest level in a week, as the government widened a probe into the issuing of mobile phone licences.

Reliance Communications Ltd (RCom), the nation’s second largest mobile phone operator, lost 3.5% as federal investigators searched homes of A. Raja, who was telecommunications minister in 2008 when the government auditor said licences were sold at below market rates. Sterlite Industries (India) Ltd, the biggest copper producer, declined with metal prices.

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“Investors don’t like uncertainty, and you don’t know how deep the rot is," said Kishor Ostwal, managing director of CNI Research Ltd, a publicly traded equities research provider in Mumbai. “You don’t know where all this is going to stop."

The Bombay Stock Exchange’s (BSE) sensitive index, or Sensex, lost 238.16 points, or 1.2%, to 19,696.48, at close. The S&P CNX Nifty Index of the National Stock Exchange slid 1.2% to 5,903.70. The BSE- 200 index fell 1.4% to 2,452.70.

RCom decreased 3.5% to 129.50. Unitech Ltd, a real estate company that has a phone venture with Telenor ASA, declined 1.6% to 65.05. Both Indian companies have previously said they are cooperating in an investigation into the sale of licences.

Raja’s homes were searched in New Delhi and Chennai, R.K. Gaur, press information officer of the Central Bureau of Investigation (CBI), said on Wednesday. Raja resigned as minister two days before the 16 November auditor report said the 2008 sale of wireless telephony licences may have lowered government revenue by 1.4 trillion.

The Supreme Court is hearing public interest petitions on alleged irregularities in the sale of airwaves and CBI is probing the matter.

Sterlite retreated 1.7% to 169.40. Hindalco Industries Ltd, the biggest aluminium producer, slid 2.1% to 222. Copper fell as much as 2% in London. Tata Steel Ltd, the biggest producer of the alloy, lost 2.4% to 624.25.

Uflex Ltd plunged 17% to 162.60 after the company said Ashok Chaturvedi, its chairman and managing director, was convicted in a case relating to a land allotment.

Shares of lenders extended declines amid concern competition for funds will increase costs and lower loan profitability.

State Bank of India, the nation’s biggest lender, sank 2.1% to 2,805, extending Tuesday’s 3% slide. HDFC Bank Ltd, the third largest, fell 3% to 2,280.45. Axis Bank Ltd plunged 5.5% to 1,251.50, its steepest decline since July 2009.

Housing Development Finance Corp. Ltd (HDFC), the biggest mortgage lender, retreated 2.3% to 684.75.

Punjab National Bank, a state-run lender, fell 1.4% to 1,180.35. The New Delhi-based lender raised its prime lending rate by 75 basis points to 12.5% and deposit rates by as much as 100 basis points, it said in a statement to BSE on Tuesday. One basis point is one-hundredth of a percentage point.

Overseas investors purchased a net 77 crore of Indian shares on 6 December, taking this year’s record inflows in equity to 1.34 trillion, according to data on the website of stock market regulator Securities and Exchange Board of India.