Mumbai: Shares fell more than 3.5% on Wednesday to their lowest in two years, as investor jitters grew on domestic concerns about high inflation, slowing growth and a vulnerable rupee.
Markets at 01:09 pm on 23-11-2011.
A gloomy global economy added to the depressed outlook, traders said.
By 12:41pm, the 30-share BSE index was down 3.14% at 15,560.05 points, with all of its components in the red. It fell as low as 15,478.69 -- its weakest since 3 November, 2009.
“The slide was on the cards,” said Jagannadham Thunuguntla, head of research, SMC Investments and Advisors. “List of problems are increasing by each passing day; inflation is growing, GDP growth is expected to be lower and rupee has depreciated to its lowest.”
The rupee had slumped to an all-time low of 52.73 against the dollar on Tuesday, down nearly 17% from its 2011 high in July, on a swelling current account deficit, rising import bill and slowing export growth.
The currency pulled back Wednesday on suspected central bank intervention and was trading up 0.5% at 52.02/03, but the near-term outlook remained bearish.
The finance ministry is not in favour of any “undue” intervention by the central bank to prop up the rupee, a senior finance ministry source told Reuters on Wednesday.
Foreign funds have sold more than $450 million worth of shares over five trading sessions till Monday, reducing the net inflows in 2011 to under $300 million, sharply below record investments of more than $29 billion seen in 2010.
Lenders were the top losers on lingering worries about asset quality as high interest rates and sluggish growth drove investors to cut exposure.
HDFC Bank dropped 5.7%, while bigger rivals ICICI Bank lost 2.8% and State Bank of India was down 2.4%.
Shares in telecom operator Reliance Communications and real estate firms DB Realty and Unitech bucked the trend and rose between 2 and 20% after the country’s top court granted bail to five company executives charged in a multi-billion dollar telecoms licensing scandal.
The broader 50-share NSE index was down 2.92% at 4,671.75 points.
In the broader market, there were 5.25 losers for every gainer, on a volume of 346.2 million shares.
Global sentiment worsened after the release of HSBC flash manufacturing purchasing managers’ index (PMI), the earliest indicator of China’s industrial activity, which slumped in November to 48, a low not seen since March 2009.
Washington said on Tuesday the US economy grew at a 2% annual rate in the third quarter, below the initial estimate of a 2.5% growth rate.
At 0730 GMT, the MSCI’s measure of Asian markets other than Japan was down 2.36%, while Japan’s Nikkei was down 0.4%.
Capital goods maker Siemens Ltd, a unit of Siemens AG, lost more than 5% after it posted late on Tuesday a 29% drop in September quarter profit.
Tata Power fell nearly 3% after Citigroup downgraded the utility citing lower operating income and higher debt.