Mumbai: Indian shares skidded to their lowest level in nearly three months on Friday, as euro zone jitters send world equities lower and raised the prospect of more foreign fund outflows.
Financials and energy major Reliance Industries contributed the most to the losses on the main index. By 11:19am, the 30-share BSE index was trading down 1.09% at 16,339.18, with 27 of its components declining. It fell as much as 2% early to 16,187.03, its lowest since 25 February. The 50-share NSE index .NSEI was down 1.1% at 4,894.65.
“There is nothing wrong with our economy. The worries are about the rest of the world,” said Arun Kejriwal, director of research firm KRIS. “I am not too sure if it is already time to buy as we do not know how much pain is still in the offing.”
India’s economy is forecast to expand more than 8% this year and corporate earnings have mostly been robust, but the outlook for the stock market has been dented by heavy foreign withdrawals as the euro zone crisis sparked a flight away from equities.
Road builder Jaypee Infratech made a dismal stock market debut, following the footsteps of state-run Satluj Jal Vidyut Nigam a day earlier, with its shares falling as much as 12%.
“The biggest casualty of the market turmoil would be the future IPOs. It remains to be seen how things pan out for the ones that are lined up,” Kejriwal said.
Data from the market regulator showed foreign funds had pulled out $1.3 billion from stocks so far in May, putting the main index on course for its third weekly fall in four.
The funds are still net investors of $5.3 billion in 2010, following record inflow of $17.5 billion last year, and analysts held out hope.
“We reiterate that unlike in 2008, the current global troubles have far less potential to hurt Indian companies with well-functioning operational parameters,” Credit Suisse analysts said in a note on Thursday. “As a result, we do not expect substantial earnings downgrade pressures in companies outside metal sectors.”
State Bank of India and ICICI Bank, the the country’s leading lenders, shed 1% each, while HDFC Bank was down 0.8%. Reliance Industries, which has the highest weight on the Sensex, was down 1.2% at 987.85 rupees, after it was forced by cyclone Laia to suspend drilling and shut an oil and gas field off the country’s east coast as a precaution.
Metal makers fell as London base metal prices slipped after a slump on Wall Street on concerns euro zone efforts to tackle the debt crisis might fall short. Tata Steel, the world’s eighth-largest steel maker by output, was down 1.6%.
Non-ferrous metals producer Sterlite Industries and aluminium maker Hindalco shed 2.86% and 3.2% respectively.
Cigarette-to-hotel group ITC bucked the trend and rose 0.3% ahead of its quarterly earnings. In the broader market, losers were more than four times the numbers of gainers on volume of 119 million shares.