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India’s Sensex Drops to One-Week Low Amid Phone Investigations

Dec. 8 (Bloomberg) -- India’s stocks fell for a second day, with the benchmark index dropping to its lowest level in a week, as the government widened a probe into the issuing of mobile-phone licenses.

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

“Investors don’t like uncertainty, and you don’t know how deep the rot is,” said Kishor Ostwal, managing director of CNI Research (India) 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 Sensitive Index, or Sensex, lost 238.16, or 1.2 percent, to 19,696.48, as of the 3:30 p.m. close in Mumbai. The S&P CNX Nifty Index on the National Stock Exchange slid 1.2 percent to 5,903.70. The BSE 200 Index fell 1.4 percent to 2,452.70.

Reliance Communications decreased 3.5 percent to 129.5 rupees. Unitech Ltd., a real-estate company that has a phone venture with Telenor ASA, declined 1.6 percent to 65.05 rupees. Both Indian companies have previously said they are cooperating in an investigation into the sale of licenses.


Raja’s homes were searched in New Delhi and Chennai, R.K. Gaur, press information officer of the Central Bureau of Investigation, said today. Raja resigned as minister two days before the Nov. 16 auditor report said the 2008 sale of wireless telephony licenses may have lowered government revenue by 1.4 trillion rupees ($31 billion).

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

Sterlite retreated 1.7 percent to 169.4 rupees. Hindalco Industries Ltd., the biggest aluminum producer, slid 2.1 percent to 222 rupees. Copper fell as much as 2 percent in London. Tata Steel Ltd., the biggest producer of the alloy, lost 2.4 percent to 624.25 rupees.

Uflex Ltd. plunged 17 percent to 162.6 rupees after the company said Ashok Chaturvedi, its chairman and managing director, was convicted in a case relating to a land allotment.

Lenders’ Shares

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 percent to 2,805 rupees, extending yesterday’s 3 percent slide. HDFC Bank Ltd., the third-largest, fell 3 percent to 2,280.45 rupees. Axis Bank Ltd. plunged 5.5 percent to 1,251.5 rupees, its steepest decline since July 2009.

Housing Development Finance Corp., the biggest mortgage lender, retreated 2.3 percent to 684.75 rupees. Punjab National Bank Ltd., a state-run lender, fell 1.4 percent to 1,180.35 rupees. The New Delhi-based lender raised its prime lending rate by 75 basis points to 12.5 percent and deposit rates by as much as 100 basis points, it said in a statement to the Bombay Stock Exchange yesterday. A basis point is 0.01 percentage point.

Overseas investors purchased a net 769 million rupees ($17.2 million) of Indian shares on Dec. 6, taking this year’s record inflows in equity to 1.34 trillion rupees, according to data on the website of the Securities and Exchange Board of India.

To contact the reporter on this story: Rajhkumar K Shaaw in Mumbai at

To contact the editor responsible for this story: Darren Boey at

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