Mumbai: Markets posted their biggest daily falls in two weeks on Monday as banks were hit by fears about slowing deposit growth, while capital good stocks like Larsen & Toubro fell on fears industrial output data due this week would weaken.
Traders, returning after domestic markets were closed on Thursday and Friday, also cited caution ahead of other key events this week, including Infosys’ earnings and inflation data on Friday.
Investors are also keenly awaiting the Reserve Bank of India policy meeting on 17 April. India’s BSE index has fallen nearly 4% since the central bank disappointed investors by leaving rates on hold on 15 March.
Expectations are split about whether the RBI will deliver a cut in the repo rate this time, or whether it will find it more urgent to deal with liquidity shortages by again targeting the cash reserve ratio after two previous cuts this year.
“Markets are pre-empting weak IIP and inflation data,” Ambareesh Baliga, COO at Way2Wealth s aid, referring to industrial output.
“On monetary policy the expectation is now there will be no change (in repo rates),” Baliga added.
Indian markets remained low on the first trading day after a long weekend. Mint’s Krishna Merchant brings you the day’s movers.
The country’s main 30-share BSE index closed down 1.51% at 17,222.14 points and the 50-share NSE index 1.66% at 5,234.40.
Those falls outpaced the 0.8% falls in the MSCI index for Asia-Pacific excluding Japan, as the region was hit by worries about the US economy after Friday’s slower-than-expected jobs growth data.
Indian banking shares were among the top decliners after deposit growth fell short of projections for the fiscal year ended in March, as customers withdrawals contributed to an acute liquidity crunch in the sector.
Net interest margins in the sector could be hit as banks may have to raise the rates offered on deposits to retain customers, analysts said, as customers prefer physical assets to financial ones in order to counter high inflation.
State Bank of India fell 2.87% while private lender ICICI Bank fell 2.61%.
Shares in power equipment maker Bharat Heavy Electricals Ltd and engineering and construction conglomerate Larsen & Toubro dropped amid expectations for weak February industrial output data due on Thursday.
The uncertainty about the data sparked a round of profit-taking in the two stocks after both recently outperformed the Nifty’s gains of 0.5% last week.
Bhel shares ended 4.3% lower after surging 6.4% last week. Larsen & Toubro slipped 3.5%.
But Ranbaxy Laboratories rose 3.99% after brokerage Macquarie said the US Food and Drug Administration was “likely” to approve next month the distribution of acne medicine CIP-Isotretinoin in the United States.
Macquarie did not specify sources for its prediction, but noted such an approval could lead Ranbaxy to gain a 20-25% market share in the segment, making it a $120-160 million product.
Shares of tyre manufacturers gained after India extended anti-dumping duties on certain types of tyres from China and Thailand until 7 October, according to a notice from the Ministry of Finance. Apollo Tyres ended up 1.3%.
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