Indian shares post biggest qtrly fall since June 92

(Updates to close)

By Hiral Vora

MUMBAI, March 31 (Reuters) - Indian shares fell 4.44
percent on Monday to end the March quarter down 22.9 percent,
their biggest quarterly fall since the June 1992 quarter, as
surging inflation and signs of an economic slowdown scared off
investors.

Monday also marked the end of the 2007/08 fiscal year, and
despite the sharp fall in the March quarter the index ended the
fiscal year up 19.7 percent due to a strong rally in 2007.

Financial stocks were hit hard, hurt by persistent concerns
of a global credit crunch and Friday's data showing a rise in
local inflation to a 14-month high of 6.7 percent in mid-March.

Top private lender ICICI Bank (ICBK.BO) fell 7.8 percent to
770.10 rupees, taking its losses for the quarter to 37.5
percent and contributing most to the fall in the main index.

Top lender State Bank of India (SBI.BO) fell 4.8 percent to
1,598.85 rupees. The sector index .BSEBANK dropped 5.9
percent on the day and 32.4 percent in the quarter.

Top mortgage firm Housing Finance Development Corp
(HDFC.BO) ended 8.8 percent lower at 2,383.75 rupees.

"Inflation is the biggest problem right now, and with the
economy slowing down there will be a pressure on margins of
corporates that will lead to an earnings downgrades," said
Nikunj Doshi, investment manager at Envision Capital.

"I think the government is more interested in controlling
inflation and would prefer it over arresting a slowing growth,"
he said.

The benchmark BSE 30-share index .BSESN ended 726.85
points at 15,644.44, with 26 components in the red. Its
quarterly fall of 22.9 percent was its biggest since a 28.1
percent drop in the June 1992 quarter.

In the broader market 1,364 gainers just beat 1,290 losers
on volume of 328 million shares.

The 50-share NSE index .NSEI lost 4.2 percent to
4,734.50.

The sharp rise in annual inflation from 5 percent at the
end of February has prompted markets to expect a policy
response form the central bank, such as higher interest rates
or increased reserve requirements for banks. See
[ID:nDEL243971].

And the worries that financial market problems would knock
the U.S economy into recession weighed on outsourcers, who get
60 percent of their revenues in the world's largest economy.

Tech bellwether Infosys Technologies Ltd (INFY.BO) fell 6.3
percent to 1,430.15 rupees, while top software services
exporter Tata Consultancy Services (TCS.BO) dropped 6.8 percent
to 810.90 rupees. The sector index .BSEIT fell 5.6 percent.

Elsewhere in the region, Karachi's 100-Share index .KSE
fell 0.93 percent to 15,125.89 points and Colombo's All-Share
index .CSE lost 0.56 percent to 2,550.47.

STOCKS ON THE MOVE:

* Cairn India Ltd (CAIL.BO) fell 2.6 percent to 224.20
rupees after the exploration firm reported a consolidated net
loss of 139 million rupees for the December quarter and said it
was still waiting for government approval for financing of a
pipeline. See [ID:nL31629748]

* Software services firms Four Soft Ltd (FOUR.BO) rose by
4.84 percent to 27.10 rupees after it decided to merge with
Take Solutions Ltd (TAKE.BO).

MAIN TOP 3 BY VOLUME:

* Ispat Industries Ltd ISPT.BO on 23.4 million shares.
* Reliance Natural Resources Ltd (RENR.BO) on 13.3 million
shares.

* Orchid Chemicals (ORCD.BO) on 11.8 million shares.

FACTORS TO WATCH
* For technical analysis double-click on www.reutersindia.net
* Indian rupee slips as stocks tumble, inflows eyed
[INR/]
* India bond yields at 5-mth high as inflation weighs
[IN/]
* FOREX-Above forecast euro zone inflation boosts euro
[FRX/]
* Oil slips as southern Iraq tensions ease
[O/R]
* GLOBAL MARKETS-Asian shares post worst quarter in over 5 yrs
[MARKETS/AS]
* US STOCKS-Wall St futures dip, eyes on recession impact

[.N]
* For closing rates of Indian ADRs
INADR
(Editing by John Mair)