Mumbai: Indian shares fell 1% on Monday, as fears that weak monsoon rains - crucial for the country’s domestic-demand-led economy - will hurt a nascent economic revival weighed on investor confidence.
Top telecoms firm Bharti Airtel fell as much as 4.8% to Rs365.50, its lowest level in more than 3 months, after a source familiar with the negotiations told Reuters on Friday that the company may increase its offer for a stake in South African peer MTN by between 5 and 10%.
Profit-taking on a recent rally in automakers such as Mahindra & Mahindra and Maruti Suzuki, and consumer-goods firms Hindustan Unilever and ITC dragged the main index lower.
Also See Monsoon Tracker (Graphics)
“It’s only because of the weak monsoon that the market is behaving like this. Other than that, the market looks good,” S Ranganathan, head of research at LKP Shares, said.
“Sectors that may be hurt by weak rains like consumer goods and autos are victims of profit-taking.”
India’s prime minister asked state governments on Saturday to take first steps to deal with poor monsoon rains that have hit sowing of important crops, leading to a sharp rise in prices of food items like sugar.
Monsoon rains in India, where only 40% farmland is irrigated, were 25% below normal since the start of the season in June and 64% below normal in the week to 5 August.
Energy giant Reliance Industries, India’s top listed firm with the most weight in the main index, retreated 0.8% to Rs1,980.
However, higher Asian markets, buoyed as better-than-expected US jobs data boosted hopes for a recovery in the global economy, lent some support.
No. 2 outsourcer Infosys Technologies gained 1.7% to Rs2,076, and bigger rival Tata Consultancy Services climbed 4.2% to Rs529.70.
By 11:36am, the 30-share BSE index was down 1% at 15,003 points, with 24 stocks declining, after rising as much as 1.7%. The 50-share NSE index was down 1% at 4,435.25.
Top carmaker Maruti Suzuki slid 4.7% to Rs1,231, while No. 1 utility vehicle maker Mahindra & Mahindra dropped 6.6% to Rs779.45. Leading vehicle maker Tata Motors eased 3.5% to Rs400.
India’s auto index was down 3.9%.
Automobile firms had reported better-than-expected profits in April-June, helped by lower input costs, while their July sales soared on new launches and easier finance, driving the auto index up more than a third from 13 July through Wednesday last week.
Hindustan Unilever shed 3.7 to Rs259.90, while ITC fell 2.5% to Rs224.30.
In the broader market, losers led gainers by 2 to 1 on relatively heavy volume of 132.8 million shares.
Asian shares were higher on Monday, with Japan’s Nikkei up 1.2%, while MSCI’s measure of other Asian markets rose 0.5%.
Graphics by Sandeep Bhatnagar / Mint