India shares slide to lowest level in two months

Mumbai (Bloomberg) India's benchmark stock index fell to its lowest level in more than two months. DLF Ltd led a decline in property stocks after Ambit Capital Pvt. said the companies may face higher borrowing costs.

DLF lost 3.8 per cent to Rs292.5, while New Delhi-based builder Unitech Ltd. dropped 6.2 per cent to Rs62.95, its lowest close since May last year.

"Debt restructuring and refinancing would go through increased scrutiny and the required asset security will go up," Parikshit Kandpal, a Mumbai-based analyst at Ambit Capital, wrote in a note to clients. Loans will be delayed, pushing builders to postpone the development of their land, which in turn increases debt-to-equity levels, he added.

Larsen & Toubro Ltd., the nation's biggest engineering company, plummeted 4.1 per cent to Rs1,934.15, while Jaiprakash Associates Ltd, a builder of dams, roads and bridges, sank 5.5 per cent to Rs114.5, its biggest decline since July 26.

The Bombay Stock Exchange's Sensitive Index, or Sensex, lost 141.69, or 0.7 per cent, to 19,318.16 at close in Mumbai. The S&P CNX Nifty Index on the National Stock Exchange retreated 1.1 per cent to 5,799.75. The BSE 200 Index dropped 1.4 per cent to 2,431.62.

The Sensex has slipped 8 per cent from a November 5 record close as inflation in China, Europe's debt crisis, skirmishes between North and South Korea and concern about the strength of US growth roiled investor confidence.

Stocks in Asia's second-fastest growing economy face their "stiffest test" as corruption scandals threaten to cap the world-beating rally that took the benchmark index to the record, Morgan Stanley analysts led by Ridham Desai wrote in a report yesterday. "Everything that could go wrong appears to be going wrong," Morgan Stanley's report said. "These events will cause the volatility in Indian equities to intensify."

Overseas investors sold a net Rs13.9 billion (Dh1.1 billion) of Indian equities on November 23, paring this year's record inflows to Rs1.3 trillion, according to the Securities and Exchange Board of India.