Markets dip, snapping four-day advance

Mumbai: India's stocks fell, ending a four- day rally, as investors speculated policymakers may raise interest rates to stem inflation.

Housing Development Finance Corp, a mortgage lender, dropped 3 per cent. India's economy may be overheating, Nouriel Roubini, the New York University professor who predicted the global financial crisis, said yesterday. Sterlite Industries (India) Ltd, a copper and zinc producer, dropped the most in almost two weeks as raw material prices sank.

"All the clouds are not off the horizon," said Apurva Shah, head of research at Prabhudas Lilladher Pvt. in Mumbai. "The reality is that India has strong growth and persistently high inflation. The broader stance of the Reserve Bank is toward tightening." He advises investors to avoid Tata Steel Ltd and Bharti Airtel Ltd, India's biggest wireless operator.

The Bombay Stock Exchange's Sensitive Index, or Sensex, fell 372.60, or 2.2 per cent, to 16,572.03, its steepest drop in a week. The gauge briefly dipped as much as 3.7 per cent as shares of Reliance Industries Ltd, the refiner that has the most weight in the Sensex, sank 20 per cent. Bourse officials are investigating, said Kalyan Bose, a spokesman.

The S&P CNX Nifty Index on the National Stock Exchange lost 2.3 per cent to 4,970.20. The BSE 200 Index retreated 2 per cent to 2,109.49.

Housing Development dropped 3 per cent to Rs2,706.8, its steepest slide since February 4. Larsen & Toubro Ltd, declined 2.3 per cent to Rs1,593.6.