Union Carbide Corp. stock fell 5 3/4 yesterday to 38 3/4 amid concern on Wall Street about the extent of the company's legal and financial liability from the poisonous gas leak at its pesticide plant in Bhopal, India.

Union Carbide was the most active stock on the Big Board yesterday, with 6.68 million shares changing hands. The stock closed last Friday at 48 7/8 and has traded as high as 67 3/8 in the last year.

Moody's Investors Service said it is reviewing the company's debt ratings for a possible downgrade because Monday's accident "could create a material financial liability for Carbide."

Standard & Poor's Corp. issued a similar statement, adding that "the loss of life and help on a scale unprecedented for an industrial accident makes it impossible to even attempt to quantify the liability. Nonetheless, it seems that a critical factor will be whether punitive damages not covered by insurance are assessed."

The company's chairman, Warren M. Anderson, and a special team of chemical experts are in India to investigate the situation.

Following reports that Union Carbide may be faced with enormous lawsuits asking for punitive damages that could affect its financial viability, the company said "it is believed that, considering both the insurance and other resources available, the financial structure of Union Carbide is not threatened in any way. The company categorically denies that it is considering seeking protection under the bankruptcy laws.

"The management of Union Carbide Corp. has examined the potential financial liability for the Bhopal situation," the company's statement continued. "Both Union Carbide Corp. and Union Carbide India Ltd. have available to them very substantial insurance resources with which to satisfy any claims made against either of them.

"The plant in Bhopal is owned by Union Carbide India Ltd., which is an Indian corporation. Union Carbide Corp. owns 50.9 percent of the stock of Union Carbide India Ltd. and, under contractual arrangement, provided certain technical assistance to that company in its operations.

"Pending discussions with the insurance underwriters, Union Carbide Corp. has not disclosed the exact extent of the insurance coverage involved."

A Union Carbide spokesman added: "If we say we are covered for 'X' million dollars, you can be sure that is the number people will sue for. So the tendency is not to disclose the amount of coverage. We are all horrified by this."

Paul T. Lemming, an analyst with Kidder, Peabody & Co. Inc., said he believes the company has more than $200 million of insurance to cover nonpunitive damages.

The threat to the corporation is if a U.S. or Indian court permits punitive damages to be awarded against the assets of the corporate holding company, rather than limiting liability to the assets of the Indian subsidiary that is directly involved in the disaster, Lemming said.

Punitive damage awards are imposed as punishments. They are damages awarded to the plaintiff beyond the actual loss.