India’s benchmark stock index fell for the first time in three days, tracking declines in other Asian markets, as weak US manufacturing and jobs data stoked concerns that the global economic recovery will slow.
ICICI Bank Ltd, the nation’s second largest lender, lost 3.3%, the most since 23 May. Tata Motors Ltd, the owner of Jaguar Land Rover, dropped to its lowest since 17 September.
The MSCI Asia Pacific Index declined 1.6% after reports showed US manufacturing expanded at the weakest pace in more than a year and employers hired fewer workers than forecast.
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The Bombay Stock Exchange (BSE) sensitive index, or Sensex, lost 114.63 points, or 0.6%, to 18,494.18. The gauge on Wednesday closed at its highest level since 2 May. The S&P CNX Nifty on the National Stock Exchange dropped 0.7% to 5,550.35.
Macro concerns on both global and domestic levels would weigh on the markets, Jigar Shah, head of research at Kim Eng Securities India Pvt. Ltd in Mumbai, said by phone. The Nifty may decline towards 5,300 this month because of these concerns, he added.
India’s factory output grew at the slowest pace in four months, a Purchasing Managers’ Index (PMI) compiled by HSBC Holdings Plc and Markit Economics showed on Wednesday.
The Sensex dropped 3.3% in May, the most since the 11% slump in January. It has lost 9.8% this year amid concerns that higher borrowing costs will hurt earnings.
Indian stocks will continue to lag behind emerging market equities as rising interest costs and inflation erode profits, according to Morgan Stanley.
The valuation relative is at a 35% premium to the rest of emerging markets, Jonathan Garner, the bank’s chief Asian and emerging market equity strategist, told reporters in Mumbai on Wednesday.
ICICI Bank declined 3.3% to Rs1,048.90. Loan pricing in the Indian market is trending downwards, B.K. Iyer, head of international syndications at the lender, said in Singapore on Thursday.
HDFC Bank Ltd, the second largest private lender, slid 1.6% to Rs2,360.30.
Tata Motors declined 2.9% to Rs1,048.20. Local sales at the nation’s third largest car maker declined 9% to 19,401 units in May. Mahindra and Mahindra Ltd, the biggest sports utility vehicle maker, fell 2.1% to Rs661.50, the lowest close since 23 March. Maruti Suzuki India Ltd slid 2% to Rs1,225.40, the most since 9 May.
Reliance Communications Ltd, the country’s second largest mobile phone operator, sank 4.3% to Rs89.95 while Reliance Infrastructure Ltd tumbled 4.7% to Rs552.35, the most since 18 February.
Asian stocks dropped for the first day in three, putting the regional index on course for its biggest drop since 23 May.
Graphic by Yogesh Kumar/Mint