New Delhi: Markets slumped more than 2% on Monday, with Reliance Industries and lenders leading the losses, as deepening concerns around the euro zone’s debt crisis dampening global growth triggered broad-based selling by investors.
Index heavyweight Reliance Industries fell as much as 3%, while lenders ICICI Bank and HDFC Bank shed as much as 4% and 3.6%, respectively.
“It’s the fear psychosis,” said D.D. Sharma, senior vice-president at brokerage Anand Rathi, adding, a lack of positive reforms by the Indian government and weak global sentiment due to the euro zone debt crisis are driving down local shares.
At 12:15am, (0645 GMT), the 30-share BSE index was down 2.27% at 16,080.22 points, with all but 3 of its components in the red.
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.
Indian manufacturing growth nearly stalled in September, hitting its weakest spot since March 2009 on slowing output and orders growth following a series of interest rate hikes, a private survey showed on Monday.
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.
“It’s the FII outflow that is further bringing down the Indian market,” said Ambareesh Baliga, COO at brokerage Way2Wealth.
Foreign funds have pulled out about $288 million so far this year from the Indian market that has fallen by about a fifth this year.
Metal and mining counters continued their decline on Monday following the Indian Cabinet’s approval on 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.
Coal India extended losses, falling nearly 2% after media reports cited its chairman as saying the world’s largest coal miner will lose about Rs 2,000 crore in profit when the proposed mining bill became a law.
Shares in Coal India had plunged 5% last Friday.
“The mining bill is positive neither for industry nor for the economy as it intends to push up the basic raw material prices,” Anand Rathi’s Sharma said.
Lenders were among the big losers on concerns central bank may not yet be done with its rate hike cycle.
India has raised interest rates a dozen times since March 2010 and has signalled more was to come.
Top car maker Maruti Suzuki gained as much as 1.3% after a month-long strike at one of its plants ended on Saturday.
Top car maker Maruti Suzuki bucked the trend, gaining as much as 1.3% as a month-long strike at one of its plants ended on Saturday, ahead of peak festive season when demand traditionally surges, cheered investors.
Utility vehicle maker Mahindra and Mahindra was up about 1% on hopes the good monsoon would help boost 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 about 1.5%, with bellwether Infosys shedding about 2% on weakening economic outlook for the United States and the Europe from where it earns the most.
Tata Consultancy Services , the top exporter in India’s flagship $76 billion software services industry, was trading down about 0.32%.
The 50-share NSE index was down 2.2% at 4,833.55. There were about four losers for every gainer in the broader market, with over 220 million shares changing hands.
The MSCI’s broadest index of Asia-Pacific shares outside Japan was down 3.55%, while Japanese shares were 1.78% lower.
JSW Steel fell as much as 8.8% on media reports of a raid by federal investigators at its key plant in southern India. The company denied the raid, saying the investigators only sought certain information about iron ore procurement.
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.
Education services provider Edserv Softsystems Ltd fell as much as 4.7% after it bought e-learning online content of Prosel Ventures for Rs 350 million in an all stock deal.