* Reliance falls 7.5 pct, most in 5 mths after court ruling
* Reliance Natural jumps 24 pct
* Weak Asian, European markets weigh on sentiment
* L&T, Sterlite among major losers
(Updates to close)
By Pratish Narayanan
MUMBAI, June 15 (Reuters) - Indian shares fell 2.4 percent
on Monday, dragged by Reliance Industries (RELI.BO) after a
court asked the billionaire Mukesh Ambani-controlled energy
group to sell gas at half the government-approved price to his
estranged brother's firm.
The ruling, which can be appealed by Reliance, sent its
shares down as much as 7.85 percent.
Investor confidence in the broader market was also hit by
renewed jitters about the global economy, weakening markets
across Asia and Europe.
"Our view on the market is that it is too expensive,"
Ambareesh Baliga, vice president at Karvy Stock Broking, said.
"We're advising clients to get out and enter the market later."
Profit-takers targeted engineering and construction
conglomerate Larsen & Toubro (LART.BO), which has almost
tripled from early March, while non-ferrous metals producer
Sterlite Industries (STRL.BO) dropped as copper prices fell.
[ID:nLF413529]
The 30-share BSE index .BSESN ended down 2.38 percent, or
362.42 points, at 14,875.52, its lowest close in a week, with
20 stocks declining.
Reliance Industries closed down 7.5 percent at 2,180.45
rupees, its biggest one-day percentage drop since Jan. 7.
The Bombay High Court on Monday asked Reliance to supply 28
million metric cubic metres a day for 17 years at $2.34 per
million metric British thermal unit to Reliance Natural
Resources (RENR.BO), Mahesh Jethmalani, a lawyer for Reliance
Natural, said. [ID:nBOM433343]
On Jan. 30, the court had issued an interim order saying
Reliance Industries was allowed to sell gas at government-
approved price of $4.2 per million metric British thermal units
from its KG-D6 block in the Krishna Godavari basin, off eastern
India. [ID:nBOM256550]
Shares in Reliance Natural, controlled by Mukesh's younger
brother Anil, leapt 24.1 percent to 108.35 rupees, its best
close in almost 13 months.
"This is more of a knee-jerk reaction. But valuations for
Reliance Industries are still expensive, irrespective of this
ruling," Ambareesh Baliga, vice president at Karvy Stock
Broking, said.
Reliance Industries would be fairly valued at about 1,800
rupees, he said.
The BSE index has risen almost 90 percent from a 2009 low
in early March, largely driven by foreign funds who pumped more
than $7.5 billion into the market since mid-March.
Hopes for investor-friendly reforms such as relaxation of
foreign investment rules in the pension and insurance sectors,
stake sales in state companies and higher infrastructure
spending after the ruling coalition was re-elected last month
have underpinned the market.
But shares are seen pricey. The market is up 54 percent
this year, after plunging by more than half in 2008 when
foreign investors withdrew $13 billion.
"Definitely the market looks stretched. No one wants to buy
aggressively as there are genuine concerns that there will be
more of a correction," Arun Kejriwal, a strategist at research
firm KRIS, said.
"This is likely to continue for at least a few days, maybe
even a week."
Traders said investors would remain cautious ahead of the
annual budget in early July, when the coalition, which was
voted back with a stronger mandate, is expected to announce
reform plans to boost growth.
Larsen & Toubro eased 4.8 percent to 1,507.10 rupees, while
Sterlite slumped 7.6 percent to 663.45 rupees.
In the broader section, losers led gainers by almost 2.5 to
1 on relatively moderate volume of 486.9 million shares.
The 50-share NSE index fell 2.2 percent to 4,484.
Asian shares dropped on Monday, pulling back from
eight-month highs hit earlier this month, as investors fretted
over whether the global economy had improved enough to justify
a further rally.
Japan's Nikkei .N225 eased almost 1 percent, while MSCI's
measure of other Asian markets .MSCIAPJ slid 2.2 percent.
At 1023 GMT, the FTSEurofirst 300 .FTEU3 index of top
European shares was down 1.6 percent.
MAIN TOP 3 BY VOLUME
* Reliance Natural (RENR.BO) on 105.4 million shares
* Unitech (UNTE.BO) on 27 million shares
* Satyam Computer (SATY.BO) on 16.2 million shares
STOCKS THAT MOVED
* GIC Housing Finance (GICH.BO) rose 2.9 percent to 84
rupees after the financial services firm said it sold 11.2
percent in LIC Mutual Fund and 3 percent in LIC Mutual Fund
Trustee Co for around 890 million rupees. [ID:nBOM464488]
* State-run Allahabad Bank (ALBK.BO) fell 2 percent to
77.35 rupees after it forecast 2009/10 net interest margin at
2.75 percent, compared with 3 percent earlier. [ID:nBOM468135]
FACTORS TO WATCH
* For technical analysis double click on www.reutersindia.net
* Indian rupee drops to 48/dlr to lowest since end-May
[INR/]
* Indian bond yields down on savings rate cut talk
[IN/]
* Dollar up sharply, helped by Kudrin comments
[FRX/]
* Oil falls towards $71 on firmer dollar [O/R]
* Dollar rises after G8, pressures oil, shares [MKTS/GLOB]
* U.S. stock futures signal losses as oil retreats
[.N] * For closing rates of Indian ADRs
INADR (Editing by Ranjit Gangadharan)
