Mumbai: Markets on Friday posted their biggest quarterly fall since the months following the Lehman Brothers collapse in 2008, as rising domestic interest rates amid slowing economic growth and concerns of a global recession kept investors wary.
The benchmark index ended the September quarter down 12.8% -- its biggest fall since shedding 25% in the October-December quarter of 2008 amid the global financial crisis and its third straight quarterly decline.
The 30-share BSE index closed down 1.46% at 16,453.8 points, with all but of its one components declining in volatile trade.
The shares had risen 1.5% in the previous session on optimism ahead of a crucial vote in the German parliament that approved new powers for the euro zone’s rescue fund.
“Outlook remains circumspect, as global cues are negative even after German parliament has voted in favour of the rescue fund,” said Deven Choksey, CEO and managing director, K.R. Choksey.
“I think, the slowdown would be felt locally in the coming months, after corporates report earnings next month,” said Choksey added.
Stocks, especially rate-sensitive sectors, also came under pressure after the government raised its borrowing target for this financial year, triggering concerns that credit costs could rise for the private sector.
Slowing growth in Asia’s third-largest economy and rising interest rates to fight high inflation have put pressure on government finances. New Delhi, which set a target to raise 400 billion rupees from state company share sales in the current fiscal year, is far behind schedule on that target.
Banks led the losses, with the country’s top lender State Bank of India dropping 2.1% to 1,911.05 rupees, and top private sector lender ICICI Bank closing down 1.72%.
The bank index , which has lost 15% this quarter on worries rising interest rates will crimp demand for credit, ended down about 1.8%.
Metal and coal miners were among major losers after India’s cabinet approved a bill calling for the firms to share either profits or amounts equivalent to royalties, a move that could boost political support for the government and free up lucrative projects but also raise business costs.
Coal India, the world’s biggest coal miner, was the biggest%age loser among BSE-30 stocks after it fell as much as 7%. Its shares dropped 5% to close at 333.20 rupees.
Tata Steel , world No. 7 steelmaker, fell 4.25% to 415.35 rupees, while non-ferrous metals firm Sterlite Industries closed 4.1% lower at Rs 113.70.
The Indian stock market has lost 19.8% year-to-date, making it one of the worst performing major markets in the world. Foreign funds have pulled out about $288 million till date this year.
The 50-share NSE index closed down 1.44% at 4,943.25.
“I don’t think Nifty October futures will go below 4,700, because at this level renewed buying interest comes in the index stocks,” said S.P. Tulsian, an independent consultant.
There were 1.8 losers for every gainer in the broader section, with 580 million shares changing hands.
Shares in Reliance Communications ended down 7.5%, a day after a report the federal police were examining the role of group chairman, Anil Ambani, in a multi-billion dollar telecoms case and that three executives charged in the case had retracted their testimony taking responsibility for decisions made by a unit of the company.
There was “no change in stand by any of the Reliance executives,” Anil Ambani’s Reliance Group said in a statement on Friday, adding that neither the Reliance Communications unit nor the founder group benefited from telecoms licences issued in January 2008.
Export-driven software services edged down after gaining through the week on expectations a weakened rupee would boost realisations for the showcase $76-billion sector.
Top software service exporter Tata Consultancy Services fell 2.28%, while No. 2 Infosys dropped 0.7%. BSE IT index was down 1.19% after gaining 7% over the week.
The MSCI’s broadest index of Asia Pacific shares outside Japan was down 1.26%.
Shares of agro-chemical makers Excel Crop and Coromandel International rose after television reports said the supreme court has allowed exports of endosulfan, a now-banned pesticide in Indian farms.
Koutons Retail India rose as much as 15.7% after bankers approved its corporate debt recast proposal late on Thursday.
JSW Steel Ltd , India’s No. 3 producer, rose as much as 5% in the day, after it said it won around 0.4 million tonnes of iron ore at an auction held by state-run miner NMDC , helping the steel maker improve capacity utilisation at its key plant in southern India.