Indian shares dropped 3.7 percent Tuesday with investors jittery over rising inflation and soaring global oil prices. The Bombay Stock Exchange's benchmark 30-stock Sensex fell 500 points, or 3.7 percent to close at 12,962 points. On the broader National Stock Exchange, the 50-company S&P Nifty index dipped 144 points, or 3.6 percent, to 3,897 points. India's inflation for the second week of June rose to a 13-year high of 11.42 percent. Analysts said the markets were reacting to weak global cues as oil prices climbed to $142 a barrel Tuesday. The Sensex fell below the psychologically important 13,000 mark for the first time since April 2007. Concerns about the fate of the federal government contributed to the slump. Analysts said foreign institutional investors sold stock due to growing fears about the instability of the federal government and the governing Congress party's failure to reach an agreement with its communist allies over a landmark nuclear deal with the United States. “Broader macro-economic concerns caused selling by foreign institutional investors. This cash selling is because of the negative view on India,” said Rajesh Jain, chief executive officer at brokerage Pranav Securities.
