Reliance Industries Ltd., the country's most valuable company, slumped 3.4 percent to 2,162.70 rupees. ICICI Bank Ltd., the nation's second-largest lender, slipped 2.5 percent to 750.30 rupees. The two companies account for 23 percent of the Bombay Stock Exchange's Sensitive Index, or Sensex, which fell 3.3 percent to 15,066.10 at the close.
``There is more pain left if oil prices continue to hit records,'' A. Balasubramaniam, chief investment officer at Birla Sun Life Asset Management Co., who oversees $8.7 billion in assets, said in a phone interview from Singapore.
Rising fuel and food costs have caused India's inflation rate to accelerate to the fastest since August 2004, adding pressure on the central bank to raise interest rates. Wholesale prices rose 8.24 percent in the week ended May 24, accelerating for a seventh week, the commerce ministry said on June 6.
The Sensex is Asia's third-worst performer this year. Nine stocks declined for every one that rose. The S&P CNX Nifty Index on the National Stock Exchange lost 2.7 percent to 4,500.95.
India imports about 70 percent of its oil. Crude oil surged $10.75, or 8.4 percent, on June 6 to $138.54 a barrel in New York, the biggest-ever gain in dollar terms and the largest percentage increase since mid-June 1996. The futures reached a record high of $139.12 during the session.
Refiners led by Indian Oil Corp. fell on concern higher oil prices will widen losses from selling fuel at below-market rates under government rules.
India Oil dropped 4 percent to 362.85 rupees. Bharat Petroleum Corp. fell 7.3 percent to 278.85 rupees and Hindustan Petroleum Corp. lost 9.2 percent to 193.25 rupees.
``The global cyclical downturn in itself was bad enough, now we have to contend with record oil prices too,'' said Mumbai- based Nilesh Jasani, head of research in India at Credit Suisse. ``Markets are still not pricing in lower earnings growth. We could be down to flat or single-digit growth in earnings.''
Jasani reiterated the firm's Sensex target at 13,000 by year-end.
Infosys Technologies Ltd. paced declines among software exporters after U.S. stocks tumbled on June 6, sparking the Dow Jones Industrial Average's worst sell-off in 15 months, after the Labor Department said the jobless rate grew to 5.5 percent in May from 5 percent in April, the biggest increase since 1986.
Indian software companies get more than half their sales from the U.S.
Infosys, India's second-biggest software exporter, fell 4.6 percent to 1,901.50 rupees. Tata Consultancy Services Ltd., the largest, slid 5.4 percent to 914.10 rupees. Wipro Ltd., India's third-largest software-services provider, declined 5 percent to 480.30 rupees. Satyam Computer Services Ltd., the No. 4, fell 3.8 percent to 490.55 rupees.
Cairn India Ltd. (CAIR IN), the local unit of Cairn Energy Plc, gained 13 rupees, or 4.4 percent, to 299.55 in Mumbai trading. It was the third-best performer on the Bombay Stock Exchange index of the 500 largest companies, after the climb in crude oil futures.
Indiabulls Real Estate Ltd. (IBREL IN) fell 24.35 rupees, or 5.8 percent, to 398. The developer backed by billionaire Lakshmi Mittal raised S$353.5 million ($259 million) from selling shares in a delayed offering of a property trust in Singapore at S$1 apiece, less than the maximum sought. The shares were offered at S$1 to S$1.10 apiece.
Infrastructure Development Finance Co. (IDFC IN) declined 8.55 rupees, or 6.7 percent, to 118.30. The financier of roads and utilities plans to raise $750 million through the sale of shares or convertible securities to fund expansion.
Oil & Natural Gas Corp. (ONGC IN) fell 59 rupees, or 6.3 percent, to 879.95. India's biggest petroleum explorer may have to pay the government 72 percent more this year to help cover the cost of compensating refiners for losses caused by selling fuel at below-market rates. Oil & Natural Gas may have to cover as much as 380 billion rupees ($8.9 billion) in revenue losses in the year ending March, up from 220 billion rupees last year, Chairman R.S. Sharma said in an interview at the Asia Oil and Gas Conference in Kuala Lumpur. Subsidies may increase further as the current payouts were calculated at an oil price of $130 a barrel, he said.
SpiceJet Ltd. (SJET IN) fell 3.2 rupees, or 8.9 percent, to 32.75. The low-fare carrier part-owned by India's Tata Group told the Bombay Stock Exchange on June 6 that it has ``not received any formal communication from any party'' about a possible buyer of a stake in the airline. It was responding to a Mint newspaper report that billionaire Anil Ambani may purchase a stake.