State-run refineries, Sterlite drag Sensex down

Mumbai: India's benchmark stock index fell for a second day as investors withdrew funds from riskier assets amid concern that Europe's sovereign-debt crisis will harm the global recovery.

Sterlite Industries (India) Ltd, the nation's largest copper producer, dropped to the lowest level in more than two weeks as the price of the metal retreated. Fitch Rating said Britain's deficit challenge is "formidable," adding to concerns Europe's fiscal crisis is spreading. Indian Oil Corp led state-run refiners lower after the government delayed a decision on raising fuel prices, citing concern about inflation.

"The problems in Europe means demand in the region will drop, and that's a concern for us," said Alex Mathews, head of research at Geojit BNP Paribas Financial Services Ltd in Kochi, southern India. "Global markets are highly correlated and they are weak at the moment."

The Bombay Stock Exchange's Sensitive Index, or Sensex, lost 163.97, or 1 per cent, to 16,617.10. The measure reversed an earlier advance of as much as 0.7 per cent after Fitch's comments. The S&P CNX Nifty Index on the National Stock Exchange dropped 0.9 per cent to 4,987.10. The BSE 200 Index fell 0.9 per cent to 2,115.38.

Sterlite fell 1.9 per cent to Rs609.25. Jindal Steel Ltd, India's third-biggest producer, lost 2 per cent to Rs1,012.05.

Indian Oil Corp dropped 1.3 per cent to Rs338.25. Bharat Petroleum Corp., the No 2, lost 3.5 per cent to Rs543.75. Hindustan Petroleum Corp retreated 2.2 per cent to Rs348.75.