BSE Sensex falls 3 pct; Reliance, banks, autos drop

MUMBAI (Reuters) – The BSE Sensex fell more than 3 percent on Tuesday, rattled by concerns a deepening global economic crisis would trigger more foreign fund outflows.

Financial stocks dropped after a record loss by Britain's Royal Bank of Scotland sparked fresh worries about the global financial sector, while energy giant Reliance Industries Ltd fell as investors braced for disappointing results.

"The market sentiment has taken a beating," said Gajendra Nagpal, chief executive officer at Unicon Financial Intermediaries.

"It is natural that when FIIs are losing money in one market, they will also start selling in other markets," he said, referring to foreign institutional investors.

By 11:39 a.m., the main 30-share BSE index was down 2.67 percent at 9,080.47 points after falling as much as 3.2 percent.

Leading software services exporter Tata Consultancy Services was one of two gainers among index stocks after it announced a multi-million dollar, multi-year deal with Italian bikemaker Ducati Motor Holding.

Foreigners have pulled out about $550 million this month, following net sales of more than $13 billion in 2008 when the main index lost more than half its value.

Top lender State Bank of India dropped 3.3 percent to 1,109.50 rupees, ICICI Bank fell 4.4 percent to 395.10 rupees and mortgage lender Housing Development Finance

Corp lost 4.4 percent to 1,478.50 rupees.

On Monday, the Royal Bank of Scotland said it was on course for a 2008 loss of up to $41 billion and that further hits from bad debts were inevitable.

The disclosure sent stocks down across the world on worries about the health of the banking industry.

Reliance Industries, which is expected to post on Thursday a drop in quarterly profit for the first time in three years, fell 3.2 percent to 1,190.55 rupees.

Leading mobile operator Bharti Airtel, which also releases quarterly earnings on Thursday, shed 5 percent to 614 rupees.

Shares in auto and construction companies registered steep declines on worries over growth outlook.

Top car maker Maruti Suzuki fell 3.5 percent to 558 rupees, Tata Motors was down 2.2 percent at 146.90 rupees and utility vehicle maker Mahindra and Mahindra slipped 2.5 percent 301.60 rupees.

Engineering and construction firm Larsen & Toubro lost 2.5 percent to 709.65 rupees, Bharat Heavy Electricals fell 2.1 percent to 1,383 rupees, and utility NTPC dropped 1.6 percent to 175.15 rupees.

In the broader market, 1,070 declines led 616 advances on moderate volume of 88 million shares.

The 50-share Nifty was trading down 2.5 percent at 2,775.30 points.

STOCKS ON THE MOVE

* Software firm MindTree Ltd fell 8.8 percent to 217 rupees after it warned of pricing pressure in the coming quarters and cut its net profit and revenue forecast for 2008/09.

* Madras Aluminium Co rose by its daily limit of 5 percent to 59.15 rupees after parent Vedanta Resources Plc approved buying the remaining 20 percent stake in the

company.

MAIN TOP 3 BY VOLUME

* Satyam Computer Services on 14.5 million shares

* Unitech on 13 million shares

* Suzlon Energy on 3.8 million shares

Source: Reuters