New Delhi: Markets slumped 1.84% on Monday to its lowest close in a week on continued foreign fund outflows dictated by global growth worries, in the absence of positive local triggers, with Reliance Industries and lenders leading the losses.
Global economic slowdown fears continued to haunt world markets as Greece’s admission that it will miss its deficit targets this year and next despite harsh new austerity measures brought the spectre of a debt default closer.
The broad-based selling dragged index heavyweight Reliance Industries down as much as 2.49%, while lenders ICICI Bank , HDFC Bank and State Bank of India dropped between 1.8% and 4.1%.
Just a handful of shares including Coal India and Mahindra and Mahindra were spared. The world’s top coal miner notched up gains of 1.13%, while the automaker added 0.85%.
The 30-share BSE index fell 302.31 points to 16,151.45, with 22 of its components closing in the red.
“It’s the global fear that is driving the markets,” said Arun Kejriwal, a strategist at research firm KRIS.
Shares had shed 12.8% in the three months to September, its biggest quarterly fall since the months following the Lehman Brothers collapse in 2008 as global growth worries stoked risk aversion.
A private survey on Monday showed Indian manufacturing growth nearly stalled in September, hitting its weakest spot since March 2009 on slowing output and orders growth following a spate of interest rate increases.
The HSBC Markit India Manufacturing PMI fell more than two points to 50.4 from 52.6, inches away from the 50 mark which divides growth and contraction.
Lenders were among the big losers on concerns India’s central bank may not yet be done with its rate hike cycle. The banking index closed down 2.82%, with top state-run lender SBI shedding 2.59% to Rs 1861.60.
India has raised interest rates a dozen times since March 2010 to tame near double-digit inflation and has signalled more such moves were likely.
India’s inflation in August accelerated to 9.78%, its highest in more than a year, from 9.22% recorded for July.
“A decline in inflation post-harvest could be a positive trigger for the market,” said Kejriwal.
This year, India has had normal monsoon rains, crucial to agriculture in the Asia’s third-largest economy.
Metal counters extended losses following the Indian Cabinet’s approval last Friday of a mining bill calling for the firms to share either profits or amounts equivalent to royalties with local communities, a move that could dent the firms’ profits.
“The mining bill is positive neither for industry nor for the economy as it intends to push up the basic raw material prices,” said D.D. Sharma, senior vice-president at brokerage Anand Rathi.
Shares in Tata Steel and Jindal Steel & Power fell 5% and 6.24% respectively.
Shares in JSW Steel fell to a more than two-year low on media reports of raids by the federal investigation agency at its plant. JSW denied the raid, saying the investigators had sought certain information about iron ore procurement. The stock tumbled 7.26% to Rs 549.05.
Utility vehicle maker Mahindra and Mahindra eked out 0.7% gains on hopes good monsoon rains and typical demand surge during the current festive season would push up sales.
Auto stocks have been under pressure this year as demand for cars has been dented by high fuel prices and rising interest rates.
Export-driven software services stocks slipped 1.51%, with bellwether Infosys shedding 2.27% on weakening economic outlook for the United States and the Europe from where it earns the most of its revenues.
Tata Consultancy Services , the top exporter in India’s flagship $76 billion software services industry, bucked the trend, closing up 0.63%.
The 50-share NSE index ended 1.9% lower at 4,849.50 points. There were about three losers for every gainer in the broader market, with over 458 million shares changing hands.
The MSCI’s broadest index of Asia-Pacific shares outside Japan was down 3.49%, while Japanese shares were 1.78% lower.
Reliance Power Ltd rose as much as 2.8% after it said it has received approval for carbon credits worth Rs 2,000 crore for its 3,960 megawatts Tilaiya ultra mega power project in eastern India. It closed 1.69% higher at Rs 78.05.
Great Eastern Shipping Co Ltd fell 6.21% to Rs 234.95 after the shipping services firm said it will sell a general purpose product carrier.
Education services provider Edserv Softsystems Ltd fell 4.12% to Rs 90.80 after it bought e-learning online content of Prosel Ventures for Rs 350 million in an all stock deal.