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Markets drop 2% to 3-month low; Europe weighs

Markets drop 2% to 3-month low; Europe weighs
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First Published: Tue, May 25 2010. 11 14 AM IST
Updated: Tue, May 25 2010. 11 14 AM IST
Mumbai: India’s main stock index dropped 2.1% to its lowest in more than three months on Tuesday as renewed fears over Europe’s debt woes triggered worries foreign portfolio investors will step up their withdrawals.
Foreigners have pulled out around $1.8 billion from Indian equities so far in May as euro zone jitters curbed global risk appetite.
The 30-share BSE index fell to 16,123.75 points, its lowest level since 15 February. It was trading down 1.98% at 16,142.27 by 11:11am, with 29 of its components declining. Financials were among the big losers. The 50-share NSE index was down 2 percent at 4,843.29.
“It seems like Europe has one new story to tell every day on its debt woes,” said K.K. Mital, head of portfolio management services at Globe Capital. “The situation is uncertain. We will have to wait and watch.”
Greek debt crisis and bulging deficits in other euro zone countries have rocked world markets over the past six weeks, and the central bank takeover of a small Spanish lender at the weekend bolstered worries the meltdown could be wider.
Export-led software companies declined on concerns the deteriorating fiscal health of the euro zone will reduce orders from the region.
Sector leader Tata Consultancy Services dropped 1.6%, while Infosys and Wipro lost 1.4% and 1.9% respectively.
The BSE index has fallen 8.1% in May, largely because of the withdrawals by foreign funds who are still net investors of $4.8 billion in 2010.
The benchmark has fared better than MSCI’s measure of Asian markets other than Japan that has shed 13.1% so far in May and MSCI’s emerging market index which is down 12.6%.
Top lender State Bank of India shed 2.3%, while rivals ICICI Bank and HDFC Bank were down 2.9% and 0.8% respectively.
Energy giant Reliance Industries, which has the highest weight on the Sensex, dropped 2.2% after rising 2.6% in the previous session.
Top consumer good maker Hindustan Unilever was down 1.9% ahead of its March quarter result.
Tata Power dropped 3.2% after the leading private sector utility said late on Monday its March quarter net profit fell 35%.
In the broader market, losers were more than thrice the number of gainers on volume of 94 million shares.
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First Published: Tue, May 25 2010. 11 14 AM IST
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