Mumbai: Indian shares shed more than 2% on Monday as investors joined a global sell-off after weak US jobs data and concerns over a potential debt crisis in Hungary hit risk appetite. Financials led the fall.
Reliance Communications bucked the trend and jumped more than 6% after the No.2 Indian mobile operator’s board approved selling up to 26% stake to strategic or private investors at a premium to its current market price.
By 10:57am, the 30-share BSE index was trading down 2.1% at 16,759.06 points, with 27 of its components declining. The 50-share NSE index was down 2.2% at 5,022.50.
“Risk is off the table as there is uncertainty as to global developments,” said Vaibhav Sanghavi, director of Ambit Capital.
“It does not matter if a country is outperforming or underperforming right now. The money is flowing out of the system,” he said.
Foreign funds, which play a decisive role in setting direction, have sold stocks worth around $22 million this month after dumping $2 billion in May following a global trend to reduce risk exposure in the wake of the euro zone debt woes.
The benchmark index is down 4% so far this year, less than half the loss in MSCI’s measure of Asian shares other than Japan that has shed nearly 9%.
Reliance Communications was up 1.1% at Rs170, after rising as high as Rs179. About 3.9 million shares changed hands in first two hours of trade, about double the full-day average of nearly 2 million in the past 30 days.
Kotak Securities said any deal to get strategic or private investors would be positive for the company, but negative for the sector that has been battling wafer-thin call tariffs and severe competition.
“This event would mean a further infusion of risk capital in the industry, without leading to any consolidation,” the brokerage said in a note.
Financials fell after the finance minister told Reuters on Friday the country would not pause rate hikes for now.
Top lender State Bank of India was down 2.5%, while rivals ICICI Bank and HDFC Bank shed 3% and 0.9% respectively.
Metals makers dropped as Shanghai copper slid by its 5% daily limit and London futures slumped to near eight-month lows.
Aluminium maker Hindalco and non-ferrous metal producer Sterlite Industries were down 5% and 4% respectively.
Tata Steel, the world’s eighth-largest steel producer, and Jindal Steel and Power dropped 3.3% and 2.7% respectively.
Real estate firms DLF, state-run utility NTPC and outsourcer Wipro, three index firms that will be impacted by a new listing rule, fell between 1.7 and 5.3%.
The government said on Friday listed companies must have a public float of at least 25%, a move which could prompt tens of billions of dollars in share sales. Oil and Natural Gas Corp rose 0.1% ahead of a ministers’ meet to discuss deregulation of fuel prices.
In the broader market, losers were more than thrice the number of gainers on volume of 80 million shares.
Elsewhere, Japan’s Nikkei was down 3.6%, while Hong Kong’s Hang Seng index shed 2.4%.