Mumbai: Indian shares extended their fall to more than 2% on Wednesday afternoon, as worries poor rains will hit economic growth, downbeat US housing data and tepid Asian peers weighed on sentiment.
At 12:17pm, the 30-share BSE index was down 2.3% at 14,689.28 points, with 28 stocks declining. The 50-share NSE index was down 2.3% at 4,356.30.
Leading lender State Bank of India, private-sector lender HDFC Bank and rival ICICI Bank led the losses in the main index.
Engineering and construction firm Larsen & Toubro and outsourcer Infosys Technologies were among the other major losers.
“Yesterday the market bounced only because we had a huge fall on Monday. Today, I am not surprised the market is resuming its downward slide because valuations are still stretched,” Gajendra Nagpal, chief executive of Unicon Financial, said.
“The market still has not discounted the impact from the weak monsoon.”
Glenmark Pharmaceuticals fell as much as 17.4% to its lowest in more than a month after the company and partner Forest Laboratories said their lung drug failed in a mid-stage trial.
Shares later pared some losses to trade down 10.5% at Rs234.15.
By 12:04pm, the 30-share BSE index was down 1.6% at 14,791.50 points, with 28 stocks declining. The 50-share NSE index was down 1.5% at 4,392.35.
The market is running out of steam after nearly doubling in five months and may be poised for a correction as investors grow wary of high valuations, a bad monsoon and looming inflation.
Doubts about the pace of a global economic recovery have emerged in the wake of a slew of recent downbeat data, pushing down equity markets worldwide on fears about stocks having risen ahead of fundamentals.
Weak monsoon rains - crucial for India’s domestic-demand-led economy - have added to the gloom. Deficient rainfall has pushed the country to the brink of drought, putting pressure on food prices and energy supplies and imperilling economic growth.
Some private economists have said poor rains could shave as much as 2 percentage points off growth in the fiscal year that ends in March. Traders say the market will be choppy until clarity emerges on the government’s response to the weak monsoon.
Larsen & Toubro shed 1.8 percent to Rs1,451, and HDFC Bank declined 1.5% to Rs1,420.
No. 2 outsourcer Infosys fell 1% to Rs1,952 rupees.
In the broader market, losers led gainers 1,364 to 985 on relatively moderate volume of 175.3 millions shares.
Asian shares were lower on Wednesday, with Japan’s Nikkei down 0.8% while MSCI’s measure of other Asian markets fell 0.7 percent.