Indian stocks were hit hard Friday, particularly the banking sector, after Finance Minister Palaniappan Chidambaram encouraged lenders to slash rates for small home loans and cancel $15 billion in loans to farmers.The wavier of loans to farmers was originally part of Chidambaram's federal budget presented to India's parliament last week. Investor sentiment in the Far East is quickly eroding as market players conclude that the government's fiscal initiatives might slow earnings growth. "Chidambaram is trying to convince banks to lend at lower rates and boost the economy. This might lead to narrower margins if not accompanied by a fall in deposit costs," said Deven Choksey, chief executive officer of Mumbai-based K.R. Choksey Shares & Securities. The Bombay Stock Exchange's Sensex Index fell 566.56 points, or 3.42%, to 15.975.52. Indian pharmaceutical company Dr. Reddy's Laboratories ( RDY) was hit with a downgrade by Citi Investment Research analyst Prashant Nair. Nair downgraded the stock from buy to hold, citing pricing pressure for Dr. Reddy's German generic business, due to regulation and a change in market dynamics. "Over the next few quarters, we expect the pain in German operations to continue and suppress overall earnings growth," said Nair. ADR shares of Dr. Reddy's fell 0.6% to $14.01. In the technology sector, Infosys ( INFY) also caught an analyst downgrade. Kaufman Brothers cut the stock from buy to hold and cut its price target from $54 to $44, citing poor visibility in the short term for new projects. ADR shares of Inosys fell 3% to $35.91. According to financialexpress.com, Indian telecommunications provider Tata Communications ( TCL) is shopping around the managed service sector looking to make an acquisition. "We are in discussions with two to three companies at any given time, and some of these talks may materialize, some may not," said Vinod Kumar, president of global data and mobility services at Tata. ADR shares of Tata communications fell 6.3% to $22.12. Fitch ratings announced Friday they will not be changing their credit rating on Indian bank Icici Bank ( IBN) after the firm disclosed mark-to-market losses on their international investment portfolio. Fitch said the market risk on the investments made by Icici Bank has so far increased income volatility without compromising its capital ratios. Rumors had originally suggested that IBN's losses were due to exposure in U.S. subprime loans, but the company denied those rumors earlier in the week. ADR shares of IBN finished down 4.8% at $43.17. Tata Motors ( TTM) chairman Ratan Tata said he would like to take a stake in Italian luxury car brand Ferrari during an interview with Italian magazine L'Espresso, according to Retuers. Ferrari is part of Italian automaker Fiat, which Tata Motors already partners with in India. ADR shares of TTM closed down 4.4% to $16.15. Leading the decliners among Indian ADRs on Friday were Rediff.com ( REDF), losing 7% to $7.28; Satyam Computers ( SAY), falling 5.6% to $23.37; and Mahanagar Telephone Nigam ( MTE), trading down 5% to $5.36. Be sure to check out the Far East Portfolio at Stockpickr.com every night to find out which stocks in India and China are making big moves and announcing major news.