Sensex has worst start in 28 yrs

India's Sensitive Index fell in January, its worst start in at least 28 years, on concerns of a possible recession in the US and as investors sold shares on the last day of the settlement of derivatives contracts. ICICI Bank led declines.

The Sensex dropped 13 per cent this month, it's biggest monthly drop since May 2006, on concern a recession in the world's biggest economy will slow growth in Asia.

Exacerbating the sell-off was the flight of foreign capital, with almost $3.3 billion of Indian equities sold in January, the most in a month since at least 1997, according to data compiled by Bloomberg.

"The fall is more related to the expiry of monthly derivatives contracts because the rollovers have been weak," said Jayesh Shroff, who helps manage $7.6 billion of assets at SBI Funds Management in Mumbai.

"I don't think sales by foreign investors are India-specific only. It is a global phenomena and it will play itself out in the market."

The monthly contracts for Indian derivatives expire on the last Thursday of every month. The rollover of a long position indicates that buyers expect a stock price to rise, while the rollover of a short position indicates to investors that prices may fall. A decrease in rollovers may signify that investors expect more volatility.

The Bombay Stock Exchange's Sensitive Index, or Sensex, fell 109.93, or 0.6 per cent to 17,648.71 after rising as much as 1.4 per cent. The gauge fell 15.5 per cent from its record close of 20,873.33 on January 8.

The S&P/CNX Nifty Index on the National Stock Exchange declined 30.15, or 0.6 per cent, to 5,137.45.

Banks, DLF
ICICI Bank, the country's most valuable bank, declined 39.20, or 3.3 per cent, to Rs 1,145.65. State Bank of India, the nation's largest bank by assets, fell Rs 58.40, or 2.6 per cent, to 2,162.25. DLF, the nation's largest real estate developer, shed Rs 49.65, or 5.8 per cent, to 812.55.

Bharti Airtel, India's top wireless services provider, rose for the second day after it said earnings growth would be "sustainable" as it adds users in the country's rural areas.

"We believe our growth momentum is picking up well, especially in the rural areas," Chief Executive Officer Manoj Kohli said in a Bloomberg Television interview from New Delhi on Thursday.

Bharti yesterday reported profit jumped 42 per cent to Rs 1720 crore ($436 million) in the three months ended December 31, after winning clients at a quicker pace than rivals in the world's fastest-growing wireless market. Bharti gained Rs 12.15, or 1.4 per cent, to 864.45.

Second-ranked Reliance Communications Ltd. fell Rs 10.4, or 1.7 per cent, to 601.95. Reliance Communications, based in Mumbai, reported profit growth slowed as handsets offered for as little as $20 failed to help it win as many customers as its larger rival.

Net income increased to Rs 1370 crore in the three months ended December 31 from Rs 924 crore a year earlier, Reliance said in a statement to the NSE on Thursday.