Indian stocks drop as growth concerns mount

Dubai: Indian stocks fell for a second day after the central bank said inflation has "emerged as a major concern," fuelling speculation it will raise interest rates for the fifth time since mid-March.

DLF Ltd., the biggest developer, declined for a third day after the Reserve Bank of India said yesterday in its annual report "inflation containment may have to receive precedence over the other policy objectives."

Two-week low

Hindalco Industries Ltd., the aluminum producer that controls US-based Novelis Inc., slid to a two-week low after an industry report showed a record plunge in US home sales in July.

The central bank "may try to cool asset prices through a rate tightening," said D.K. Aggarwal, who manages about $100 million (Dh367 million) as chairman of SMC Wealth Management Services Ltd. in New Delhi.

"There is also concern about the global economic recovery, which is not giving investors the confidence to buy stocks," Aggarwal said.

The Bombay Stock Exchange's Sensitive Index, or Sensex, lost 103.26, or 0.6 per cent, to 18,208.33 at 12.07pm. in Mumbai.

The S&P CNX Nifty Index on the National Stock Exchange dropped 0.6 per cent to 5,473.3. The BSE 200 Index retreated 0.7 per cent to 2,335.97.

DLF decreased 2.1 per cent to 315.5 rupees. State Bank of India, the nation's biggest lender, dropped 0.7 per cent to 2,824.85 rupees, its first retreat in three days.