Sensex falls on slow industrial growth

The country's Sensitive Index fell for the second day, after a government report showed industrial production in July grew at the slowest pace in nine months. ICICI Bank led declines.

"The production numbers were a bit of a disappointment, especially after we saw good growth over the last few months,'' said Sanjay Dongre, who oversees about $1 billion in stocks at UTI Asset Management Company in Mumbai.

The Bombay Stock Exchange's Sensex slid 37.41 points, or 0.2 per cent, to 15,505.36 at the close. It earlier rose as much as 0.8 per cent. The S&P/CNX Nifty Index on the National Stock Exchange was little changed at 4,496.85. Nifty futures for September delivery were also little changed at 4,485.10.

ICICI slid Rs 16.5, or 1.8 per cent, to 884.7. HDFC Bank fell Rs 6.15, or 0.5 per cent, to Rs 1,181.6.

Production at factories, utilities and mines rose 7.1 per cent from a year earlier, the statistics bureau said in a statement in New Delhi on Wednesday. Analysts expected a 9.6 per cent increase. Loans to consumers and companies grew at the slowest pace in three years last month.

The central bank has raised its policy rates by 2.25 percentage points in the past three years and since December has increased the proportion of deposits that commercial banks must place with it as reserves by 2 percentage points to 7 per cent.

Reliance Industries, the world's largest polyester maker, gained on expectation the acquisition of the assets of yarn maker Hualon Corp will help boost fabric exports.

Reliance Industries climbed Rs 26.65, or 1.3 per cent, to Rs 2,012.95. The company will pay $250 million to buy the assets of Hualon Corp of Malaysia, CNBC-TV18 television news network reported yesterday, without saying where it got the information.

Reliance on September 10 said it bought some assets of bankrupt Hualon to increase its polyester-making capacity by a quarter.

"About 95 per cent of Hualon's $800 million of revenue are from exports,'' Rahul Singh, an analyst at Citigroup, said in a note to clients on Wednesday.

"The timing of the distressed asset sale during the present lackluster stage in the polyester cycle implies good chances of it being cheap relative to replacement costs.''

Overseas investors sold a net Rs 62.9 crore ($15.4 million) on September 10, according to the latest information on the Securities & Exchange Board of India website.