By Saikat Chatterjee Dec. 23 (Bloomberg) -- India’s benchmark stock index posted its biggest drop in more than two weeks, led by banks and engineering companies on concern corporate earnings may be hurt by slowing economic growth. Larsen & Toubro Ltd., the nation’s largest engineering company, fell 4.4 percent, the most in more than a month. ICICI Bank Ltd., the country’s second-biggest lender, fell 5.4 percent. The Bombay Stock Exchange’s Sensitive Index, or Sensex, declined 278.19, or 2.8 percent, to 9,650.16 as of 2:18 p.m. local time, the steepest drop since Dec. 5. The S&P CNX Nifty Index on the National Stock Exchange slid 59.60, or 2 percent, to 2,979.70. The BSE 200 Index lost 2.1 percent to 1,156.54. Nifty futures for December delivery fell 1.5 percent to 2,993.85. “Earnings, starting next month, is something that a lot of analysts won’t be able to predict properly,” said Shashank Khade, who manages about $400 million at Kotak Securities Ltd. in Mumbai. “There won’t be too much of good news in January.” Indian companies will start reporting third-quarter results in the second week of January. The government said today the country should be prepared for economic expansion of about 7 percent in the year to March 31, easing from 9 percent or more annually in the past three years as the global slump hurts exports. Larsen & Toubro lost 35.50 rupees, or 4.4 percent, to 779.50. Bharat Heavy Electricals Ltd., the country’s biggest power- equipment maker, fell 31.50 rupees, or 2.3 percent, to 1,369.75. “There is a lot of uncertainty regarding manufacturing and construction companies, where working capital cycles are long and debtor days are getting longer,” Khade said. Loans Fall Indian banks have tightened lending to companies and individuals to avoid an increase in bad loans. The banks’ outstanding loans fell 2.9 percent to 26.4 trillion rupees ($540 billion) in the two weeks ended Dec. 5, according to latest central bank data. ICICI Bank retreated 5.4 percent to 421.45. HDFC Bank Ltd., the third-biggest by market value, dropped 3 percent to 988 rupees. The Sensex has declined 52 percent this year, the worst drop since 1979, on concern that the economy may slow and as overseas investors withdrew $12.95 billion from Indian stocks. The following are among the most active shares traded on the Bombay and National stock exchanges. Stock symbols are in parentheses after company names: Crompton Greaves Ltd. (CRG IN) lost 3.60 rupees, or 2.7 percent, to 130.65. The Mumbai-based engineering company cut its capital spending for the year to 1.5 billion rupees from 2.2 billion rupees, the Business Line reported, citing Managing Director S.M. Trehan. Jaiprakash Associates Ltd. (JPA IN) fell 9.2 rupees, or 11 percent, to 78.20. The nation’s biggest builder of dams said yesterday its board approved a plan to acquire Jaypee Hotels Ltd., Jaypee Cement Ltd. and Gujarat Anjan Cement Ltd. It will also purchase Jaiprakash Enterprises Ltd. in a share swap, the company said in a statement to Bombay Stock Exchange. To contact the reporter on this story: Saikat Chatterjee in New Delhi at schatterjee4@bloomberg.net.

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