Sensex drops to five-month low

Most Indian stocks declined as companies belonging to billionaire Anil Ambani, including Reliance Power, extended losses.

Reliance Energy, the nation's second-largest utility by market value, fell for the fourth day. Reliance Communications, India's second-largest wireless company, declined for the second day. Reliance Power dropped 4.8 per cent, extending the 17 per cent decline on its trading debut yesterday.

"The immediate provocation is that retail and high net worth individuals sold out," said Sashi Krishnan, chief investment officer at Bajaj Allianz Life Insurance Co., who oversees $3.6 billion in assets.

"There were a large number of people who had borrowed money to buy this share and they had to exit irrespective of what the stock listed at."

Five stocks fell for every one that rose on the Bombay Stock Exchange and 11 of the exchange's 13 industry indexes closed lower.

The benchmark Sensex fell for the fifth day, dropping 22.90 points, or 0.1 per cent, to 16,608.01. It had risen as much as 2 per cent earlier in the day.

The gauge of 30 companies has fallen 11 per cent in the past five sessions and has dropped to its lowest value since September 21.

The S&P CNX Nifty declined 18.75 points, or 0.4 per cent, to 4,838.25. Reliance Energy fell Rs 46.55 to 1,535.75. The stock has lost more than 25 per cent in the past four days. Reliance Communications declined 2.5 per cent to 575.70.

Reliance Natural Resources, which secures gas supplies for group companies, fell 5.7 per cent to 117.15. It has declined 27 per cent in four days.

Banks, loans
Reliance Power shed Rs 17.95 to 354.55. A global rout in equities dried up demand for new shares after Reliance Power raised $3 billion in India's biggest initial public offering in January. Investors had sought $189 billion worth of shares.

Axis Bank, India's fourth-largest by market value, led the banking index higher after Finance Minister Palaniappan Chidambaram asked state-run banks to boost home and consumer loans, which he said were the key to economic growth.

"There is a feeling that adequate credit is not being provided to the housing sector and the consumer durables sector," Chidambaram said in New Delhi on Tuesday after meeting chiefs of state-run banks.

"Banks have been asked to pay attention to provide adequate credit to these two sectors as they are drivers of the economy."

Axis Bank rose the most in more than two weeks, gaining Rs 61.7, or 6.7 per cent, to 989.8. State Bank of India, the nation's top bank by market value, rose Rs 12.15, or 0.6 per cent, to 2,057.40.