Indian Stocks Fall the Most in Six Weeks, Tata Steel Leads Drop

India’s benchmark stock index fell the most in six weeks as investors judged recent gains may have exceeded the outlook for earnings growth.

Tata Steel Ltd., the nation’s biggest producer, dropped the most in four months. Infosys Technologies Ltd., a software services exporter that gets a fifth of its sales in Europe, lost 1.6 percent. The European Central Bank is due to announce its interest rate policy today in Frankfurt.

“We are seeing markets taking a breather after the strong rally,” said Shashank Khade, who manages funds for wealthy clients at Kotak Securities in Mumbai. “We will see some more profit-booking as investors take some money off the table.”

The Bombay Stock Exchange’s Sensitive Index, or Sensex, fell 1.1 percent to 20,315.32 at the 3:30 p.m. close in Mumbai. The S&P CNX Nifty Index on the National Stock Exchange lost 1.1 percent to 6,120.30. The BSE 200 Index dropped 0.9 percent to 2,587.49.

The Sensex has gained 27 percent from a May 25 low, approaching the record closing high of 20,873.33 on Jan. 8, 2008. The measure climbed 12 percent last month, the most since May 2009. Stocks on the Sensex are valued at 19.2 times earnings, compared with 13.6 times for Brazil’s Bovespa Index, 8.5 times for Russia’s Micex Index and 15.1 times for China’s Shanghai Composite Index, among the so-called BRIC markets.

Tata Steel

Tata Steel sank 4.2 percent to 649.7 rupees, its steepest slide since June 7. Jindal Steel & Power Ltd. declined for the first time in six days, losing 1.9 percent to 736 rupees.

Infosys Technologies, India’s second-largest software services provider, retreated 1.6 percent to 3,053.45 rupees. Tata Consultancy Services Ltd., the largest software-services exporter, lost 1.1 percent to 948.8 rupees. Wipro Ltd., India’s third-largest software-services provider, fell 1.6 percent to 457.7 rupees, retreating from its highest close in more than a decade. The companies get at least 20 percent of their sales in Europe.

The ECB’s 22-member Governing Council convenes today in Frankfurt and President Jean-Claude Trichet may comment on the economic outlook at a press conference after its policy decision is announced. Policy makers will set the benchmark lending rate at a record low of 1 percent for an 18th month in the announcement due at 1:45 p.m. in Frankfurt, according to all 52 economists in a Bloomberg News survey.

Overseas funds bought a net 9.7 billion rupees ($217 million) of Indian equities on Oct. 5, extending this year’s record inflows to 939.7 billion rupees, according to the nation’s market regulator. Foreign fund inflows have surged 59 percent this year, according to data from the Securities and Exchange Board of India compiled by Bloomberg.

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