Growth concerns and graft probe weigh on benchmark

Mumbai: India's benchmark stock index sank to a seven-month low as investigators widened a corruption probe and Credit Suisse Group said investor confidence may be dented by concerns that economic growth will slow.

Jaiprakash Associates, the nation's biggest builder of dams, dropped to its lowest level in 22 months. Anil Ambani's group of companies plunged after NDTV-Profit reported that India's top accounting body sought information from Reliance Power and Reliance Infrastructure. DB Realty slipped to a record low after the Central Bureau of Investigation arrested a managing director yesterday in a probe related to the sale of mobile-phone licences.

"The market is in a bearish grip," said Apurva Shah, head of research at Prabhudas Lilladher in Mumbai.

"High interest rates will surely slow economic growth next year. The corruption probe will slow decision-making in the government."

The Bombay Stock Exchange's Sensitive Index, or Sensex, lost 182.93, or 1 per cent, to 17,592.77 at the 3:30 pm close in Mumbai as 22 shares fell while eight rose. The gauge is down 14 per cent this year, the second-worst performer after Egypt's EGX 30 Index.

India's economic expansion may slow as interest rates climb, Credit Suisse said in a report yesterday. The pace of expansion may drop to 7.7 per cent in the year ending March 31, 2012, from an estimated 8.4 per cent this year, Robert Prior-Wandesforde, the Singapore-based head of India and Southeast Asia economics at Credit Suisse, wrote in the report.