Indian shares fall 4.66 percent to near three-month low

MUMBAI, June 9, 2008 (AFP) – Indian shares fell 4.66 percent to under 15,000 points in morning trade Monday in the wake of a Wall Street plunge triggered by surging oil prices and a sharp jump in US unemployment, dealers said. The benchmark Mumbai 30-share Sensex index fell 726 points to 14,846.18, a near-three month low.

“We have been advising investors to stay on the sidelines. Buying opportunities will come later, but this is not the time,” said Apurva Shah, head of research with brokerage Prabhudas Lilladher.

Concerns that India’s central bank may hike borrowing costs or take other steps to slow lending in a bid to curb inflation — running at more than eight percent — had also damaged sentiment, dealers said.

“The global scenario looks bleak but we expect the US markets to recover at some stage, considering they are moving into election mode,” said Naresh Garg, a fund manager at the Sahara Mutual fund.

Last week, the government hiked petrol and diesel prices to cut huge losses at state-run oil firms, which sell fuel at below cost to help the poor. India imports 70 percent of the oil needed for its fast-growing economy.

Rising food and fuel prices threaten to be a key issue at general elections du