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Business News/ Market / Stock-market-news/  Markets rattled by GDP, China data, slump 2%
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Markets rattled by GDP, China data, slump 2%

The S&P BSE Sensex tumbled 2.2% to 25,696.44 at the close in Mumbai on Tuesday, the lowest since 11 August 2014

The S&P BSE Sensex tumbled 2.2% to 25,696.44 at the close in Mumbai on Tuesday, the lowest since 11 August 2014. Photo: Hemant Mishra/MintPremium
The S&P BSE Sensex tumbled 2.2% to 25,696.44 at the close in Mumbai on Tuesday, the lowest since 11 August 2014. Photo: Hemant Mishra/Mint

Mumbai: Indian stock markets dropped for a second day, led by lenders and metal producers, after Asia’s third-biggest economy grew at a slower pace than estimated.

Axis Bank Ltd. and State Bank of India retreated at least 3% to pace losses for the financial sector. Hindalco Industries Ltd., an aluminum maker, dropped to a six-year low, dragging down an index of metal producers for the first time in six days. Reliance Industries Ltd., owner of the world’s largest refining complex, declined to a one-week low. Bharat Heavy Electricals Ltd. fell to an 11-month low.

The S&P BSE Sensex tumbled 2.2% to 25,696.44 at the close in Mumbai on Tuesday, the lowest since 11 August 2014. The gauge plunged 6.5% this August, the most since November 2011, as foreigners pulled the most money from local shares in seven years amid a global selloff triggered by China’s shock devaluation of the yuan. Gross domestic product (GDP) rose 7% in the April-to-June period from a year earlier, data showed Monday, below the 7.4% median estimate in a Bloomberg survey.

“If economic growth isn’t going to be as fast as anticipated, banks will be the first to see the problem getting reflected in their asset quality," R. Sreesankar, head of institutional equities at Prabhudas Lilladher Pvt. in Mumbai, said in an interview with Bloomberg TV India. The brokerage will “revisit" its overweight recommendations on financial-services companies, while it remains bullish on software exporters and drugmakers, he said.

Macquarie Capital Securities India Pvt. slashed its December Sensex target to to 28,700 from 31,600 to “build in lower earnings" after a weak June quarter and continued weakness in the three months ending 30 September, analysts Rakesh Arora and Arjun Bhattacharya said in an e-mail. Macquarie has been the most accurate index forecaster in Bloomberg surveys over the past two years.

Earnings outlook

Sensex company profits will climb 4.4% in the September quarter after increasing 0.9% in the preceding quarter, data compiled by Bloomberg show. Eighteen of the 30 Sensex companies, or 60%, matched or beat estimates during the June quarter, versus 40% in the March quarter.

Axis Bank Ltd. plunged 5.5%, the worst performer on the Sensex. State Bank decreased 3.3% to its lowest level since 7 October and HDFC Bank Ltd. lost 2.7%. The 10-member S&P BSE India Bankex tumbled 3.6% to its lowest since 23 October last year. Punjab National Bank and Bank of Baroda were the worst performers on the banking gauge, tumbling more than 6% each.

Housing Development Finance Corp., the biggest mortgage lender, retreated 2.4%, extending last month’s 12% slide.

Hindalco Industries plunged 5.1% to its lowest level since July 2009, while Vedanta Ltd. slumped 4%, ending a three-day advance. Tata Steel Ltd. also declined 4%.

Reliance Industries slid 1.9% to its lowest level since 24 August. Bharti Airtel Ltd., the top mobile-phone operator, retreated 2.5%, while Bharat Heavy Electricals, the biggest power-equipment maker, dropped 3.8%. The stock has lost 18% of its value this year.

International funds pulled$2.5 billion from local shares through Friday’s close in August, the biggest withdrawal for any month since October 2008, according to data compiled by Bloomberg.

The Sensex has decreased 6.6% this year and is valued at 14.6 times projected 12-month earnings. The MSCI Emerging Markets Index is valued at a multiple of 10.5. Bloomberg

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Published: 01 Sep 2015, 09:47 AM IST
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