Indian shares slumped to close 2.47 percent lower on Monday, hit by worries about early general elections, inflation and oil prices, dealers said. The benchmark Mumbai 30-share Sensex index fell 340.62 points to 13,461.6, a 14-month low. "There is no appetite for equities at the moment," said Hiten Mehta, a fund manager at Fortune Financial Services.
Indian inflation has jumped to a fresh 13-year high of 11.42 percent, fanning fears about economic growth. Concerns about domestic politics have also hit investor sentiment.
Losers led gainers 2,107 to 543 on volume of 53.6 billion rupees (1.24 billion dollars). The rupee fell against the dollar at 42.95 from 42.7 and fell against the euro to 67.81 from 67.34. Interest-rate sensitive auto, property and banking stocks fell.
Several economists expect India's central bank to raise rates further, but this may not occur before its scheduled meeting on July 29. Last Tuesday, the Reserve Bank of India raised its repo rate - the rate at which commercial banks borrow funds from the central bank - to 8.5 percent from 8.0 percent with immediate effect.
It also announced a two-stage hike of the cash reserve ratio, or the amount of cash banks must hold in reserve, by 25 basis points to 8.50 percent effective July 5, and by another 25 basis points to 8.75 percent on July 19.
India's largest property firm DLF fell 28 rupees or 6.6 percent to 396.2. Leading vehicle maker Tata Motors fell 22.6 rupees or 5.03 percent to 426.7. Leading private sector housing finance firm HDFC fell 90.3 rupees or 4.4 percent to 1,962.4.