Indian stocks fall to 14-month low

The benchmark 30-share Sensex on the Bombay Stock Exchange closed 132.27 points or 0.78 percent down at 16,857.91 -- its sixth straight day of losses and its lowest closing level since June 3 last year.

The index had opened 3.0 percent lower at 16,432 points but clawed back its intraday losses before slipping back into the red.

"We expect stocks in India to reflect increased risk aversion and heightened volatility in the short term," said Nomura Securities analyst Prabhat Awasthi in a client note.

Indian buying opportunities would be boosted if the stock falls continue, making share valuations more attractive, Awasthi said.

He added softer global commodity and oil prices were also a positive factor as they raised hopes that domestic inflation could ease from near double-digit levels and allow India's central bank to modify its hawkish monetary stance.

Indian software exporters with large exposure to the US market like TCS, Wipro and Infosys, telecoms and metal stocks fell.

Steel producer Tata Steel was down 4.87 percent at 486.05 rupees, while sister firm Tata Motors slid 4.33 percent on worries about slowing economic growth, rising interest rates and high inflation.

India's government and central bank have downplayed fears of a domestic growth slump, asserting that the country's still inward-looking economy is relatively insulated from growing global uncertainties.

"The fear (in the Indian market) is about growth. We expect a certain amount of dilution in stock valuations," said Kim Eng Securities analyst Jigar Shah.

Copyright AFP (Agence France-Presse), 2011