India’s Stocks Fall Most in Three Months; Tata Motors Slides

India’s stocks fell the most in more than three months after Germany banned speculators from short selling government bonds and financial institutions, fanning concern the global economic recovery may be derailed.

Tata Motors Ltd., the owner of Jaguar Land Rover, dropped the most in the more than ten months. Wipro Ltd., the third-biggest software services provider, lost 1.5 percent. Investor confidence was dented after the German restrictions triggered a drop in the euro and commodities. The European Union is India’s largest trading bloc.

“World markets are reacting negatively to the European crisis,” said D.K. Aggarwal, who manages funds for wealthy individuals as chairman of SMC Wealth Management Services Ltd. in New Delhi. “India’s economy has gone global so we have to live with this.” He’s avoiding technology, metals and companies with business in Europe. Aggarwal declined to give the value of assets he oversees or say what companies he’s buying or selling.

The Bombay Stock Exchange’s Sensitive Index, or Sensex, fell 467.27, or 2.8 percent, to 16,408.49, its steepest decline since Jan. 27. Six out of the 30 stocks on the gauge plunged by more than 5 percent, pushing the measure below its 200-day moving average for the first time in more than a year. Some investors may read the breach as a signal of further declines.

European Sales

The S&P CNX Nifty Index on the National Stock Exchange lost 2.9 percent to 4,919.65. The BSE 200 Index retreated 2.8 percent to 2,092.01.

Tata Motors fell 7.4 percent to 714.9 rupees, its steepest one-day slide since June 29.

“The concerns about Europe are affecting Tata Motors,” said Mahantesh Sabarad, a Mumbai-based analyst at Fortune Equity Brokers India Ltd. “They have a big exposure in that market through Jaguar Land Rover.”

Wipro declined 1.5 percent to 649.7 rupees. Tata Consultancy Services Ltd., the largest software services exporter, slid 1.9 percent to 721.5 rupees. The two software exporters get more than a fifth of their sales in Europe.

Sterlite Industries (India) Ltd., the nation’s largest copper and zinc producer, dropped 6.8 percent to 637.75 rupees. Tata Steel Ltd., the biggest producer of the alloy, retreated 3.4 percent to 512.5 rupees. Hindalco Industries Ltd., the biggest aluminum producer, lost 3.9 percent to 156.5 rupees.

Commodities Decline

Crude oil slumped to a seven-month low in New York as the dollar climbed against the euro, curbing the investment appeal of commodities. Copper for three month delivery fell 2.8 percent on the London Metal Exchange.

The euro is at risk and the European Union may be facing its greatest challenge with “incalculable” consequences if leaders fail to act, German Chancellor Angela Merkel told lawmakers in Berlin today. Germany will act alone if necessary in controlling “destructive” financial markets, Merkel said.

India’s rupee depreciated to its weakest per dollar since February 2009 on speculation overseas investors will pare holdings of emerging-market stocks.

Forwards contracts in the rupee show traders increased bets for the currency to weaken in three months. Overseas funds sold an average $81 million a day more of the nation’s equities than they bought this month, compared with net purchases of $111 million in April.

“The rupee is facing flak because some sort of panic seems to be erupting in Europe, which is denting the confidence of investors,” said Sudarshan Bhatt, chief currency trader in Mumbai at state-owned Corporate Bank. “There is a possibility flows to emerging markets may slow in the near term.”

Overseas investors sold a net 10.3 billion rupees ($225.3 million) of Indian equities on May 17, reducing their total purchases of stocks this year to 265 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:

Bank of Rajasthan Ltd. (BOR IN) jumped 20 percent to 119.35 rupees. ICICI Bank Ltd. (ICICIBC IN) offered 25 of its shares for every 118 Bank of Rajasthan shares under a takeover agreement with some of Bank of Rajasthan’s shareholders, ICICI said in a statement yesterday.

ICICI Bank sank 7.3 percent to 824.45 rupees, its steepest decline since July 6.

GlaxoSmithKline Pharmaceuticals Ltd. (GLXO IN) declined 5.1 percent to 2,064.3 rupees. The drugmaker was cut to “neutral” from “buy” by Saion Mukherjee and Avinash Ghalke, analysts at Nomura Holdings Inc., who said a “steep increase” in the share price this year leaves “little room for upside.”

ICRA Ltd. (ICRA IN) climbed 1.4 percent to 979.15 rupees. The credit assessor part-owned by Moody’s Investors Service said profit in the three months to March 31 rose 24 percent to 158.5 million rupees as it won more rating assignments.

Mandhana Industries Ltd. (MNDN IN) gained 2.7 percent to 133.55 rupees as the maker and exporter of textile products began trading today. The company raised 1.08 billion rupees selling 8.3 million shares to the public at 130 rupees a piece.

Ranbaxy Laboratories Ltd. (RBXY IN) lost 5.9 percent to 423 rupees. The U.K.’s drug regulator asked India’s biggest drugmaker to recall unused stock of three batches of Mirtazapine antidepressant tablets because their information leaflets haven’t been updated, according to a statement on the regulator’s website.