Indian shares slid to a near 19-month low on Friday in nervous trade prompted by concerns that the central bank could raise interest rates further and uncertainty about global economic growth. The benchmark 30-share Sensex on the Bombay Stock Exchange closed down 297.5 points or 1.84 percent to 15,848.83 - its lowest closing since February 5, 2010.
Investors unwound positions before a crucial US Federal Reserve meeting at which many hope chairman Ben Bernanke will outline plans to revive the ailing US economy. Factors such as huge anti-corruption protests triggered by scandals embroiling the Indian government and signals of further rate hikes to curb near double-digit inflation also played on investors' minds, analysts said.
"Our markets are in a bear grip with no feet of their own," said Alok Churiwala, managing director of Churiwala securities. Overseas funds have sold Indian equities worth $2.17 billion this month, after buying a net $1.7 billion of equities in July, according to the Securities and Exchange Board of India.
India's central bank on Thursday warned of a rocky road for the economy in the months ahead due to high inflation, predicting a slowdown in growth to near 8.0 percent, amid increasing global uncertainty. India's government forecasts growth of around 8.5 percent, matching last year's performance, but economists have lowered their estimates to between seven and eight percent.
The central Reserve Bank of India has said it will maintain its anti-inflationary stance to battle inflation, even if it means sacrificing growth in Asia's third-largest economy. On the Sensex, energy giant Reliance Industries, run by billionaire businessman Mukesh Ambani, slid 4.61 percent or 34.8 rupees to 719.5 after media reports that the company might miss its goal of drilling 11 new wells.
Stocks in his brother Anil's Reliance Communications tumbled 10.8 percent to 72.25 rupees and subsidiary Reliance Capital plunged nearly 12 percent to 344.2 on reports that the latter would be removed from the National Stock Exchange index because of its fall in market capitalisation.