Indian shares fell the most in more than three-and-a-half months to close 2.8 percent lower on Wednesday, its lowest close since late February, as global stocks tumbled after Germany's move to sharpen financial regulation raised doubts on global recovery, triggering a flight to safety. Foreign funds have already pulled out around $770 million from Indian equities so far in 2010, and there were concerns the pressure could continue until the eurozone situation improves.
Top private lender ICICI Bank dropped as much as nearly 8 percent on concerns its proposed deal to buy small private sector Bank of Rajasthan was expensive. The 30-share BSE index closed 2.77 percent or 467.27 points lower to finish at 16,408.49 points, its lowest close since February 25. Twenty-seven of its components closed in the red. India's benchmark index has already shed 6.6 percent this month as the euro zone debt woes triggered foreign fund outflows, bringing down net inflows to $5.7 billion so far this year. In 2009, record $17.5 billion purchases by foreign funds drove the index up 81 percent. It is down 6 percent so far in 2010.
Based on the all-stock deal's swap rate and Tuesday's closing prices, ICICI would pay 188.42 rupees per share, a premium of 89 percent to the small lender's Tuesday close, valuing the business at $668 million. Energy giant Reliance Industries, which has the highest weight on the Sensex, closed 2.2 percent lower at 998.30 rupees.
Metal makers declined as industrial metal prices declined and outlook remained uncertain. Non-ferrous metals producer Sterlite Industries and aluminium maker Hindalco dropped 7.3 percent and 3.9 percent respectively. Tata Steel, world's eighth-largest steelmaker, closed 3.6 percent lower. In the broader market, losers were more than thrice the number of gainers in a relatively lower volume of 381 million shares. The 50-share NSE index closed 2.9 percent lower at 4,919.65 points, its lowest close since February 25.
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