BSE Sensex at 2-mth closing low; Reliance falls

MUMBAI (Reuters) - The BSE Sensex dropped 3.1 percent on Tuesday, a sixth straight fall that took it to its lowest close in two months, pulled down by a sell-off in energy giant Reliance Industries and weak global markets.

Disappointing corporate earnings announced over the weekend, including from second-ranked mobile operator Reliance Communications also weighed on investor sentiment.

Reliance Industries fell 5.7 percent to 1,820.65 rupees, its lowest close in nearly four months, ahead of the resumption of a court hearing over terms of a deal to supply gas to Reliance Natural Resources.

"Too many things are bothering Reliance (Industries): bad results, court case and falling refining margins," said Rajen Shah, chief investment officer at Angel Broking.

Reliance Communications fell 5.7 percent to 165.90 rupees, its lowest close in more than seven months, after its quarterly earnings halved and as a crunching call tariff war threatened more pain ahead.

The stock is down over 46 percent since the end of September.

"There is already tremendous pressure on operating margins because of the price war and tariff erosion, and today's fall is a knee-jerk reaction to the results," said K.K. Mital, head of portfolio management services at Globe Capital.

The 30-share BSE index fell 3.1 percent or 491.34 points to 15,404.94, with 27 of components declining.

It was the biggest percentage point fall since Aug. 17, and the index has now lost 8.4 percent over the six sessions.

"Market is coming down to saner levels," said Shah.

"We had more than doubled in a span of few months, and nothing other than liquidity flow supported that kind of surge."

Foreign funds have poured in more than $14 billion so far this year into equities, which are up nearly 60 percent.

World stocks fell on Tuesday as investors continued to worry over the early removal of government stimulus, particularly in the financial sector.

Top lender State Bank of India fell 4 percent to 2,103.50 rupees on concerns over asset quality, even after it reported a 10.2 percent rise in quarterly profit on the weekend.

"We maintain Reduce on SBI due to concern on aggressive growth which might lead to further pressure on NIMs (net interest margins) and asset quality," Alchemy Share & Stock analysts Shashin Upadhyay and Rahul Jain said in a note.

Aluminium producer Hindalco declined 10.5 percent to 109.15 rupees, after its September quarter net profit halved.

Consumer goods maker Hindustan Unilever fell 3.6 percent to 272.75 rupees, reporting its September quarter net profit dropped 21.6 percent.

Top mobile operator Bharti Airtel bucked the weaker trend on the day, rising 2.7 percent to 299.95 rupees, although it is still down more than 28 percent since the end of September.

"Bharti is just trying to catch up after the recent fall," said Shah.

Top car maker Maruti Suzuki climbed 1.1 percent to 1,418.80 rupees, after its October sales rose an annual 32.4 percent

In the broader market, four stocks fell for every one that rose, with volume a moderate 412 million shares.

The 50-share NSE index fell 3.14 percent to 4,563.90, its lowest close in 2-½ months.

STOCKS THAT MOVED

* Suzlon Energy fell 12.9 percent to 58.25 rupees, its lowest close in more than six months, after the wind turbine maker said its September quarter loss widened and cut its full-year sales forecast due to order delays.

* Sugar maker Balrampur Chini Mills fell 10.1 percent to 134.30 rupees, after it denied it was in stake sale talks with Bajaj Hindusthan.

MAIN TOP 3 BY VOLUME

* Suzlon Energy on 22.2 million shares

* Reliance Natural Resources at 21.5 million shares

* Indiabulls Power on 16 million shares

(Editing by John Mair)

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