BSE Sensex Ends Down 1.6%

MUMBAI -- Concerns about a delay in economic recovery after disappointing U.S. data and a heavy selloff in Bharti Airtel shares pushed Indian stocks lower Monday.

The Bombay Stock Exchange's Sensitive Index was down 1.6% to end at 16,866.41. The benchmark index traded between 16,835.80 and 17,062.01 during the session.

Friday, U.S. stocks ended lower for the seventh time in eight sessions after the U.S Labor Department said the unemployment rate climbed to 9.8% last month.

"This is an overdue correction that is happening, aided by international markets. Indian markets had clearly run up much ahead of fundamentals," said Ambareesh Baliga, vice president at Karvy Stock Broking.

The 30-stock Sensex has soared about 75% this year due to sustained buying by foreign funds, which have invested about $12.4 billion so far in 2009.

"Liquidity is feeding on itself. Since markets were moving up, liquidity was coming in," Mr. Baliga added.

According to local brokerage Sharekhan, the Sensex could trade between 16,450 and 17,200 points for the rest of the week.

On the National Stock Exchange, the 50-stock S&P CNX Nifty fell 1.6% to 5,003.20.

Total traded volume on the Bombay Stock Exchange fell to 53.45 billion rupees ($1.12 billion) from 65.37 billion rupees Thursday. Decliners outnumbered gainers 1,991 to 779, while 63 stocks were unchanged. Indian markets were closed for a holiday Friday.

"Fresh buying is restrained as global markets are showing signs of fatigue. With results expected soon, it is likely that investors are waiting to see how companies perform before making trading calls," said R.K. Gupta, managing director at Taurus Asset Management.

India's corporate results season begins October 9 when technology bellwether Infosys Technologies reports its fiscal second-quarter earnings.

"Results may have some amount of disappointment as margin growth may not keep pace with the previous two quarters," Karvy's Mr. Baliga said. He expects results to bring more negative surprises, rather than positive ones, as investors' "bar for expectation has gone up."

Selling Monday was stock-specific, with Bharti Airtel and Grasim Industries leading losses on the Sensex.

Bharti Airtel shares tanked 8.1% to 400.30 rupees as funds sold heavily after the telecommunications operator's proposed merger with South Africa's MTN Group fell apart due to regulatory hurdles.

The deal with MTN was the only near-term trigger for the stock as it faces stiff domestic competition and earnings growth appears limited, dealers said.

Shares of Grasim Industries slumped 7.1% to close at 2,509.10 rupees after the cement and fiber maker said Saturday it will spin off its cement business and merge it with wholly owned unit Samruddhi Cement.

With the spin off, Grasim will consolidate its cement operations under unit Ultratech Cement. Samruddhi Cement will be merged with Ultratech over the next 10 months.

Among other major losers were Hindalco Industries, which fell 6.8% to 118.15 rupees; State Bank of India, down 3.5% at 2,131.90 rupees; and ICICI Bank, which declined 1.5% to end at 910.75 rupees. Reliance Industries fell 1.5% to 2,137.10 rupees.