Mumbai: Markets extended their losing streak to the sixth consecutive session on Tuesday, hitting their lowest in more than 14 months, amid a global equities selloff triggered by fears that political leaders are failing to tackle the US and Europe debt crises.
Export-driven software firms such as Infosys and Tata Consultancy were among the biggest losers as the global economic turmoil dented the outlook for the outsourcing business.
India’s showcase $76 billion software and services sector, which has already been reeling under competitive pressure and sluggish demand, counts the United States and Europe as the two biggest markets.
Major Asia indexes fell between 4 and 9% on Tuesday, following drop of more than 6% on Wall Street on Monday in the first trading session since the historic downgrade of the United States’ AAA credit rating by Standard & Poor’s.
While the US downgrade late on Friday was the most obvious blow to confidence, investors have also been spooked by data suggesting the U.S. economy was stalling and Europe’s ever-worsening sovereign debt crisis.
At 10:21am, main 30-share BSE index was trading down 1.82%, or 308.86 points, at 16,679.84 points, with 27 of its components in the negative territory. It had earlier fallen as much as 3.3% to 16,432.00 -- its lowest since June 1, 2010.
At the day’s lowest level, the benchmark was down more than 10% in six straight sessions, its longest losing streak since May this year.
“The sentiment continues to be bearish and we need to see how events unfold on the global economic front in the coming days before taking a call on the markets,” said Anshu Kapoor, private wealth head at Edelweiss Global Wealth Management.
Kapoor, who is advising his clients to build up their long-term fixed income portfolios, said institutional as well as retail investors were dumping Indian equities due to the uncertainty but there was no panic selling in the markets.
“From the long-term perspective, India continues to be a very good market structurally and I expect the fund inflows in the market to improve after interest rate and the inflation cycle peaks out in a few months,” he said.
Foreign institutional investors have sold Indian equities worth about $556 million so far this month, after investing a net $2.3 billion until July end.
Goldman Sachs on Monday upgraded India to “marketweight” after keeping an “underweight” rating for over a year citing a likely improvement in the macroeconomic situation, lower oil prices and attractive stock valuations.
The US investment bank said Indian equity markets may moderately outperform the Asian region on a six months basis.
“There will be overall pressure due to the global uncertainty but things are not yet as bad as they were during the downturn, so there should be a bounceback in the immediate short-term after this kind of a sharp selloff ,” said Neeraj Dewan, director at Quantum Securities.
Shares in other Indian firms that have large exposure to overseas markets also took a hit. Energy major Reliance Industries , which gets more than 60% of revenues from exports, were down 2.6%.
Tata Steel , which operates a majority of its capacity in Europe, and Tata Motors , which gets 80% of its profits from its Jaguar Land Rover unit, fell more than 3% each.
Financial stocks also slipped as worries about slowing credit demand and a likely rise in bad debts weighed down the sector. The sector index slipped 1%, with ICICI Bank and HDFC Bank among the major losers.
The 50-share NSE index was down 1.5% at 5,041.50 points.
In the broader market, 1,179 declines far outnumbered 215 advances on volume of 216.4 million shares.
IPCA Labs rose 1.5% to Rs 326 after the company said it plans to buy 100% share capital of Onyx Research Chemicals Ltd.
PVR Ltd rose 3.3% after the company said its June quarter net profit more than doubled.