Sensex falls from 3-week high as lenders drop

Stocks dropped, with the benchmark index retreating from a three-week high in volatile trading, as automakers and lenders retreated.

Tata Motors, owner of Jaguar Land Rover, and Bajaj Auto, a motorcycle maker, were among the worst performers on the S&P BSE Sensex. Oil & Natural Gas Corp, the largest explorer, declined for the first time in five days. Housing Development Finance Corp, the largest mortgage lender, slid the most in a week and Axis Bank retreated 1.1 per cent.

The Sensex fell 0.2 per cent to 27,645.53 at the close, changing direction at least 10 times. Stocks rose on Monday, extending a twoweek rally, after a report on the progress of the monsoon strengthened expectations that slowing inflation will allow the central bank to cut rates. Global funds bought $275 million of stocks on May 15 in a second day of purchases, paring this month's outflows to $448 million, still the highest among eight Asian markets tracked by Bloomberg.

“After Monday’s uptick, it’s prudent to see amount of consolidation,” Gaurang Shah, a vice president at Geojit BNP Paribas Financial Services, said in an interview with Bloomberg TV India on Tuesday. “The sell-side figures from the foreign investors seem to have subdued and that’s comforting. The worst is possibly behind us.”

The Sensex entered a socalled correction on May 7 after completing a 10 per cent decline from its January 29 record amid concern about the pace of earnings growth and delays in the passage of key economic bills in parliament.

Consumer prices climbed 4.87 per cent in April from a year earlier, slowing from 5.17 per cent in March, data showed last week.