Sensex crashes on scam probe fears

Reliance ADA Group stocks tumble

Friday8217;s selloff reverses five positive sessions

The investigation into telecoms licence awards that may have cost the government as much as 39 billion in lost revenue has led to arrests,seen members of India8217;s corporate elite questioned by authorities,and battered the government of Prime Minister Manmohan Singh,and has shown no signs of abating.

The 30-share BSE index closed 295.30 points lower at 18,211.52,reversing early gains,with 25 of its components closing in the red.

At 11 percent down this year,the Indian benchmark is the worst performer among major global stock indexes in 2011.

FIIs foreign institutional investors don8217;t know how deep is the corruption mess yet,so they are either staying away or exiting when they have an opportunity,said Prakash Diwan,head of institutional business at Networth Stock Broking.

The 50-share NSE index closed down 1.58 percent at 5458.95 points.

Earlier on Friday,Indian police raided a television station linked to the government,the latest development in a week that has seen two of India8217;s highest-profile businessmen questioned by authorities in the telecoms investigation.

Reliance Comm,the country8217;s No.2 cellular carrier,ended down 6.8 percent while sister firms Reliance Infrastructure and Reliance Power lost 5.6 and 7 percent,respectively.

People are clearly avoiding Anil Ambani stocks right now due to corporate governance issues,Diwan said.

On Wednesday,Anil Ambani,the world8217;s 36th richest man last year according to Forbes,was questioned at Central Bureau of Investigation headquarters in New Delhi in the telecoms probe.

A day later,Prashant Ruia,the chief executive of the Essar Group,one of India8217;s biggest business houses,was also questioned. Shares in group company Essar Oil lost 5.3 percent on Friday.

Shares in property firms DB Realty and Unitech lost 5.9 percent and 6.9 percent,respectively. A senior executive from DB Realty was arrested in the investigation,and a Unitech executive has been questioned.

Unitech and Reliance Comm were the top two volume churners among the main stocks traded on the BSE. They have lost 48 and 36 percent,respectively,in 2011.

METALS MELT

Metal producers fell as Shanghai copper lost more than one percent to its lowest in nearly three weeks,as worries over further monetary tightening in China weighed on financial markets.

Non-ferrous metals producer Sterlite Industries and aluminium producer Hindalco dropped 2.1 percent and nearly 1 percent,respectively. Tata Steel,the seventh-largest maker of the alloy fell 2.6 percent.

In the broader market,nearly three shares declined for every share that advanced,while 284 million shares changed hands on the BSE,lower than its 90-day average daily volume of 379 million.

The 50-share NSE index declined 1.6 percent to 5,458.95 points

STOCKS THAT MOVED

State-run oil marketing companies Bharat Petroleum,Hindustan Petroleum Corp and Indian Oil Corp were down between 1.8 percent and 3.8 percent as world oil prices rose.

Personal care products maker Marico closed 0.4 percent higher at 125 rupees after it said it has acquired 85 percent stake in Vietnamese company International Consumer Products Corp,and expects revenues of over 32 million in FY12 from this acquisition.

MAIN TOP THREE BY VOLUME ON BSE

Unitech on 13.1 million shares

Reliance Communications on 5.6 million shares

LIC Housing Finance on 5.1 million shares

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