Sensex down 97 points on policy concerns

Indian shares fell 0.6 per cent on Tuesday, with many investors staying on the sidelines in the absence of policy initiatives by the government to reverse slowing growth.

Reliance Industries Ltd (RIL) and lenders State Bank of India and HDFC Bank were among the big losers, on concerns about earnings outlook.

“Many investors have suffered losses and they are not in a position to take much risk. And, there is no clarity on the policy front,” said D D Sharma, senior vice-president at brokerage Anand Rathi.

The Bombay Stock Exchange benchmark Sensex closed down 96.80 points at 15,873.95, with 22 of its components declining. The index, which rose 1.5 per cent on Monday, seesawed through the day.

The government has been caught in a policy gridlock with most reform measures being stalled and tight monetary policy to tame stubborn inflation has slowed economic growth.

While India holds 10 per cent of the world’s coal reserves, power companies often struggle to access local supplies due to environmental and land acquisition delays, forcing expensive imports.

The 30-share BSE index has fallen about 22 per cent this year, making it one of the worst performing ones in major countries. Foreign funds have pulled out a net $470 million this year, compared with net inflows of $29 billion in 2010.

Parliament began debating the Lok Pal Bill on Tuesday as social activist Anna Hazare renewed his anti-corruption protest in Mumbai to press for early passage of a tough law.

“There is resentment among people against corruption. But markets are unlikely to be impacted as long as the protest remains peaceful,” said Arun Kejriwal, strategist at research firm KRIS.

State Bank of India shed 1.3 per cent, HDFC Bank dropped 0.9 per cent and ICICI Bank lost 0.5 per cent.

Reliance Industries shed one per cent to Rs 753.05 after JM Financial downgraded the company to ‘hold’ from ‘buy’ and cut target price to Rs 850 from 1,015, mainly due to reducing refining margins and lower-than-expected exploration and production volumes from its KG-D6 oil field.

The National Stock Exchange Nifty fell 0.6 per cent to 4,750.50. In the 50-share market, there were about 1.5 losers for every gainer on a relatively light volume of 387 million shares.