Indian shares extend losses to fifth day

New Delhi: Indian shares fell two per cent yesterdayextending losses to a fifth day and posting their first weekly drop in five weeks, as record high oil prices and rising inflation unnerved investors.

But leading mobile firm Bharti Airtel, which is likely to bid for South Africa's MTN, rose for a second day after falling nearly nine per cent in two sessions on concerns over financing a deal that could top $20 billion.

Traders said worries the government would arm-twist companies to cut prices to tame inflation undermined sentiment in the broader market, where losing stocks outnumber-ed gainers by almost three to one.

Finance Minister P. Chid-ambaram said the government would take more measures if needed to calm prices after annual inflation in late April came in at 7.61 per cent, its highest since November 2004.

"We are in the process of persuading the cement companies to roll back prices. If that succeeds, that will also be an administrative step," he said.

The 30-share BSE index fell 2.01 per cent, or 343.58 points, to 16,737.07, with 27 components losing ground. It dropped 4.9 per cent on the week, its first weekly loss since the week ended April 6.

In the broader market, volume was higher at more than 402 million shares.

"People fear that there will be government intervention on prices as they have done with steel and cement, which would hurt companies," said Rajesh Agarwal of CD Equisearch.

The index had risen about 19 per cent from its 2008 low in mid-March before it started to digest the gains last week and is down 17.6 per cent this year.

With world oil prices setting new highs every day there was little chance of the market recovering next week, Agarwal said.

Oil prices

"Oil prices are not hot, they are boiling and inflation is the major concern," he said.

Oil hit a new record high above $125 a barrel yesterday sparking concerns of a spike in inflation, which could force central banks to act. Global equity markets mostly fell.

Financial stocks that were struggling on poor sentiment in world markets extended losses after the inflation data.

Leading private lender ICICI Bank fell nearly two per cent to Rs874.05, while top mortgage firm HDFC shed 2.8 per cent to Rs2,644.70.

Petrochemicals giant and refiner Reliance Industries fell 5.2 per cent to Rs2,527.65, its lowest close in almost five weeks.

Bharti Airtel closed 1.8 per cent up at Rs842.20.