Bangalore: The BSE Sensex on Monday posted its worst monthly fall in more than two years, tracking weak global markets as anti-government protests in Egypt led to risk aversion, with inflation and rate rise fears further dampening sentiment.
The 30-share BSE index shed 0.4 per cent on Monday leading to a 10.6 per cent fall in the month, its lowest since October 2008.
"There is a lot of concern in the market about food security, oil prices," said Arun Kejriwal, director of research firm KRIS.
"Most certainly a dead cat bounce is overdue, but I am not sure if that will make a difference to the direction of the market."
Telecoms stocks ended lower on India's plan to de-link second-generation radio (2G) spectrum that now comes free with telecoms licences and ask companies to pay for spectrum based on market-linked prices.
Bharti Airtel ended 2.6 per cent lower, while Reliance Communications shed 2 per cent. Idea Cellular closed 0.8 per cent lower.
The top two software firms Tata Consultancy Services and Infosys Technologies were among the top losers, falling 2.2 per cent and 1.8 per cent respectively, on growing uncertainty about the outsourcing business momentum.
The chief executives of Tata Consultancy and Infosys told Reuters last Friday at Davos that Europe's debt crisis and rising inflation at home could slow the growth that they have enjoyed in recent years.
The main index fell 68.2 points to close at 18,327.76, with 17 of its components losing ground.
"Egypt is not a very big market for foreign institutional investors. There will be a reaction because of how it may affect the other regions, but a major reaction won't happen in India," said R.K. Gupta, managing director of Taurus Mutual Fund.
More than 100 people have been killed during six days of protests in Egypt aimed at toppling President Hosni Mubarak.
A wider conflagration in the region could threaten the flow of oil at a time when policymakers in emerging markets are already bedeviled by high food and fuel prices and some developed economies are gaining momentum.
Indian investors' sentiment has also been dented by soaring inflation and rate rises that are starting to hit corporate margins and leading to more foreign fund managers slashing holdings.
Foreign funds have pulled out over $1.06 billion from Indian equities in January until Thursday, in contrast with a record $29.3 billion they pumped in last year.
The Indian rupee hovered near two-month lows pressured by the fund outflows.
"With the market and the rupee at these low levels, I will not be surprised if foreign funds start booking profits elsewhere to move to India," Taurus' Gupta added.
Banking shares were mixed after the banking sector index shed over 5 per cent in the past three sessions on fears rising interest rates will hit demand for loans.
Mortgage lender Housing Development Finance Corp fell 2.7 per cent and HDFC Bank dropped 0.8 per cent, while top lenders State Bank of India and ICICI Bank bucked the trend and added 0.9 per cent and 0.3 per cent.
Top car maker Maruti Suzuki dropped more than 5 per cent to a new 12-month low after its December-quarter net profit slipped 18 per cent and its finance chief said cost pressures and competition would keep margins under pressure.
However, the shares rebounded towards the end of the session to close up 1.6 per cent at 1,252.80 rupees.
Oil and Natural Gas Corp rallied more than 7 per cent intraday after its quarterly net profit more than doubled, boosted by rising crude prices and one-time gains. The shares ended 3.7 per cent higher at 1,177.55 rupees.
In the broader market, losers led gainers in the ratio of 1.5-to-1 on a volume of 329 million shares.
The Nifty or NSE-50 index was down 0.1 per cent at 5,505.90 points.
By 1050 GMT, the MSCI world equity index and Thomson Reuters global stock index were down 0.3 per cent each, while the emerging markets index declined 0.8 per cent.
Stocks that moved
Siemens surged 21.6 per cent to a 52-week high of Rs 884.95 after the company's parent Siemens AG said it was making an open offer to buy upto 19.82 per cent stake in the Indian arm at Rs 930 per share. Its shares ended 17.3 per cent higher at Rs 853.50.
MindTree plunged more than 14 per cent to a 52-week low of Rs 442.50 after the company's chairman Ashok Soota resigned over the weekend. The software services provider's shares shed 5.1 per cent to close at Rs 489.20.
Dr Reddy's Laboratories Ltd ended up 3.7 per cent at Rs 1,624.45 after India's No. 2 drugmaker said a US district court cleared the sale of its generic version of Sanofi-Aventis' allergy medicine Allegra D24.
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