Sensex drops 96 points as growth slows to 9-yr low

Indian stocks declined, with the benchmark index completing its worst May performance since 2006, as a report showed the economy grew at the slowest pace in nine years.

ICICI Bank, the country’s biggest private lender, and Tata Motors, which owns Jaguar Land Rover, sank to their lowest price in four months. Asia’s third-largest economy grew 5.3 per cent in the March quarter, compared with a median 6.1 per cent of 31 estimates in a Bloomberg survey.

The Sensex, slid 0.6 per cent, or 96.32 points to 16,218.53 at the close, its lowest level since May 25. The gauge lost 6.4 per cent this month, the biggest decline since a 14 per cent slump in May 2006. Discord in the ruling coalition and claims of graft have caused policy gridlock, impeding Prime Minister Manmohan Singh’s push to open up the economy. Investments fell to 34.4 per cent of gross domestic product last financial year from 38.1 per cent in 2007-08, according to Morgan Stanley.

“There’s policy paralysis in the government,” said Anil Singhvi, chairman at Ican Investment Advisors Pvt, by phone from Mumbai. “Unless day-to-day action is taken, we will reach a level of despondency. We are close to a meltdown.”