Mumbai: Indian shares dropped 3.1% on Tuesday, a sixth straight fall that took the market to its lowest close in two months, pulled down by a sell-off in energy giant Reliance Industries and weak global markets.
Disappointing corporate earnings announced over the weekend, including from second-ranked mobile operator Reliance Communications also weighed on investor sentiment.
Reliance Industries fell 5.7% to Rs1,820.65, its lowest close in nearly four months, ahead of the resumption of a court hearing over terms of a deal to supply gas to Reliance Natural Resources.
“Too many things are bothering Reliance (Industries): bad results, court case and falling refining margins,” said Rajen Shah, chief investment officer at Angel Broking.
Reliance Communications fell 5.7% to Rs165.90, its lowest close in more than seven months, after its quarterly earnings halved and as a crunching call tariff war threatened more pain ahead.
The stock is down more than 46% since the end of September.
“There is already tremendous pressure on operating margins because of the price war and tariff erosion, and today’s fall is a knee-jerk reaction to the results,” said KK Mital, head of portfolio management services at Globe Capital.
The 30-share BSE index fell 3.1% or 491.34 points to 15,404.94, with 27 of components declining.
It was the biggest percentage point fall since 17 August, and the index has now lost 8.4% over the six sessions.
“Market is coming down to saner levels,” said Shah.
“We had more than doubled in a span of few months, and nothing other than liquidity flow supported that kind of surge.” Foreign funds have poured in more than $14 billion so far this year into equities, which are up nearly 60%.
World stocks fell on Tuesday as investors continued to worry over the early removal of government stimulus, particularly in the financial sector.
Top lender State Bank of India fell 4% to Rs2,103.50 on concerns over asset quality, even after it reported a 10.2% rise in quarterly profit on the weekend.
“We maintain Reduce on SBI due to concern on aggressive growth which might lead to further pressure on NIMs (net interest margins) and asset quality,” Alchemy Share & Stock analysts Shashin Upadhyay and Rahul Jain said in a note.
Aluminium producer Hindalco declined 10.5% to Rs109.15, after its September quarter net profit halved.
Consumer goods maker Hindustan Unilever fell 3.6% to Rs272.75, reporting its September quarter net profit dropped 21.6%.
Top mobile operator Bharti Airtel bucked the weaker trend on the day, rising 2.7% to Rs299.95, although it is still down more than 28% since the end of September.
“Bharti is just trying to catch up after the recent fall,” said Shah.
Top car maker Maruti Suzuki climbed 1.1% to Rs1,418.80, after its October sales rose an annual 32.4%. In the broader market, four stocks fell for every one that rose, with volume a moderate 412 million shares.
The 50-share NSE index fell 3.14% to 4,563.90, its lowest close in two months.