Nifty posts biggest one-day fall in nearly 4-1/2 months

By Abhishek Vishnoi

MUMBAI (Reuters) - The Nifty slumped nearly 1.5 percent on Friday, posting its biggest single-day fall in nearly 4-1/2 months as blue-chips such as ICICI Bank fell on risk aversion after crude oil scaled nine-month highs on rising violence in Iraq.

Investors said higher crude oil prices, if sustained, would increase the subsidy bill and trade deficit, while falls also tracked dampened global equity markets.

The new government got the best news on the economy in a year on Thursday, as industrial growth rebounded and retail inflation dropped to a three-month low - signs of an economic revival that could offset the threat of patchy summer rains.

Investors are now waiting for the wholesale inflation data for May due on Monday and the U.S. Federal Reserve decision on further tapering its bond buyback-led stimulus and indications on interest rates on Wednesday.

"Oil is on boil but for the short term. It may lead to some correction but the market would bounce back," said G. Chokkalingam, founder of Equinomics, a research and fund advisory firm.

The BSE Sensex fell 1.36 percent, or 348.04 points, to end at 25,228.17, also marking a weekly fall of 0.66 percent.

The Nifty lost 1.41 percent, or 107.80 points, to end at 7,542.10, closing below the psychologically important 7,600 level, also declining 0.54 percent for the week.

Both the indexes marked their biggest single day percentage falls since Feb. 3.

ICICI Bank fell 2.1 percent while Axis Bank slumped 4.5 percent.

Among state-run lenders, State Bank of India lost 3.5 percent, Bank of Baroda fell 3.9 percent while Punjab National Bank ended 2.5 percent lower.

Among other blue-chips, Larsen & Toubro fell 2.1 percent while Tata Steel slumped 4.4 percent.

NTPC fell 4.3 percent and Tata Motors lost 2.5 percent.

Hero MotoCorp lost 4.6 percent after U.S. private equity firm Bain Capital Partners LLC was seen selling its equity stake worth up to $393 million in India's largest maker of motorcycles and scooters, according to a deal term sheet seen by Reuters.

Bharti Airtel fell 2.5 percent, adding to Thursday's 3.8 percent slump, after Credit Suisse downgraded the stock to "underperform" from "neutral," citing competition from rival Rel Jio, a unit of Reliance Industries.

ADF Foods Ltd gained 4.9 percent after domestic high net worth individuals (HNIs) such as Nikhil Vora and Lashit Sanghvi bought stakes in the company via block deals on Thursday, dealers said.

Fears of consolidation drove some investors to stocks of software exporters seen as defensives. HCL Technologies rose 2.3 percent while Tech Mahindra ended 1.1 percent higher.

(Editing by Anupama Dwivedi)