Mumbai: The Bombay Stock Exchange (BSE) Sensex declined 1.3% on Thursday, ignoring robust industrial output growth in March, and joined the sell-off in world equities as weaker commodity prices weighed on investor sentiment for riskier assets.
Index of Industrial Production (IIP) grew at a faster-than-expected pace in March, allaying fears of a slowdown in the economy that will allow the Reserve Bank of India to continue with rate hikes to control high inflation.
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Financial stocks led the losses on continued concerns of rising interest rates, with the sector index losing 1.6%.
The 30-share BSE index closed 1.34%, or 249.17 points, lower at 18,335.79, with 26 components declining. The index had briefly turned positive immediately after the industrial output data.
“We will continue to see volatile trade for some time now, until commodities, mainly oil settles down,” said Prasanth Prabhakaran, president of retail broking at India Infoline Ltd. ”Oil within $90 to $100 (per barrel) is comfortable, but beyond that it is a worry for our country,” he added.
Oil slipped to around $112 per barrel on Thursday, extending the previous session’s sell-off.
Deven Choksey, managing director and CEO of brokerage KR Choksey Shares and Securities Pvt. Ltd, said the market would drag for a while as there were no positive triggers in sight.
Concerns over hardening interest rates have led to some caution from foreign institutional investors, who are key drivers of Indian stocks.
They have been sellers in nine of 12 sessions to 10, offloading more than $1 billion of Indian equities in the period.
The BSE benchmark index is down 10.6% year-to-date, lagging MSCI’s emerging equities index that is down only 0.3% in 2011.
The 50-share National Stock Exchange (NSE) index ended the day down 0.3% at 5,546.25 points.
Losers outpaced gainers in the ratio of 2.4 to 1, on a volume of 605 million shares on the NSE, lower than its 90-day daily average volume of 641 million shares.
Top lender State Bank of India shed 1.3%, while leading private lenders ICICI Bank Ltd and HDFC Bank Ltd dropped 2.3% and 0.9%, respectively.
Mortgage lender Housing Development Finance Corp. Ltd was down 2.8%.
Metal producers dropped as base metal prices slumped in international trade. Sterlite Industries (India) Ltd, Hindalco Industries Ltd and Tata Steel Ltd declined between 1.6% and 5.1%.
Copper tumbled to a five-month trough as investors headed for the exit, fearing slower economic growth and demand from top consumers China and the US.
The MSCI’s world equity index fell 1% by 1029 GMT, while its emerging market sub-index slid 1.6%.
Jindal Saw Ltd slid 3.2% to Rs 184.10, as the pipe maker reported a bigger-than-expected 55% drop in the quarterly net profit.
Kavveri Telecom Products Ltd rose 5.2% to Rs130.95 after it said its board will meet on 20 May to consider an acquisition in Europe.
ARSS Infrastructure Projects Ltd dropped 7.8% to Rs 433.10 after the infrastructure firm said late Wednesday that its March quarter net profit fell 12.1%.
Graphic by Paras Jain