Midsession: Markets extend fall to 2%; banks drop

Midsession: Markets extend fall to 2%; banks drop

Mumbai: Indian shares extended losses to 2% on Friday afternoon led by bank stocks, taking cues from Europe where banking shares were the biggest losers after RBS posted a first-half loss.

ICICI Bank and State Bank of India were among the main losers.

By 1:08pm, the 30-share BSE index was trading down 1.8% at 15,235.60 points with 27 components losing, after falling as low as 15,200.35.

The 50-share NSE Index was down 1.85% at 4,500.10 points

Markets fell 0.8% at noon, tailing weak Asian peers as investors awaited a key US jobs report for further cues amid worries that markets may be getting ahead of fundamentals.

News on Thursday that India’s monsoon rains - crucial for the country’s domestic-demand-led economy - were barely a third of normal in the previous seven days also weighed on sentiment, traders said. [

Along with banks, the auto sector, which includes top carmaker Maruti Suzuki and top utility vehicle maker Mahindra & Mahindra, fell 3.5%, extending a 4.4% drop in the previous session.

But Indian state utility NHPC Ltd saw its IPO worth up to $1.25 billion fully subscribed soon after opening to investors on Friday in a strong response that may embolden the government to sell stakes in more firms.

By 12:20pm, the 30-share BSE index was down 170.79 points at 15343.24 points, with 21 stocks declining. The 50-share NSE index was down 51.90 points at 4,544.25.

“Stocks in some sectors had gone ahead of the market, and investors are thinking it is a good time to take profits. The monsoon is also not progressing the way it should," A N Sridhar, a fund manager at Sahara Mutual Fund, said.

“But we could see some buying coming in at lower levels as investors are still cautiously optimistic," he added.

The benchmark fell 2.45% on Thursday, as investors took profits on the market’s near 19% rally over the previous 3-weeks.

The rally was driven by strong domestic and global corporate earnings. But worries that stocks are pricey have emerged as the main index has leapt 93% from a 2009 low in March and 61% this year.

This year, only China’s, Russia’s and Indonesia’s benchmarks have outperformed the BSE index, which trades at 17.9 times one-year forward earnings.

In contrast, benchmarks in other emerging markets such as Brazil, Indonesia and South Korea trade at a multiple of about 13-14, while Russia trades at 8 times.

On Friday, Maruti Suzuki slid 3.9% to Rs1,311, while Mahindra & Mahindra dropped 6.6% to Rs823.50. Top vehicle maker Tata Motors eased 3.1% to Rs405.15.

Automobile firms reported better-than-expected profits in the April-June quarter, helped by lower input costs, while their July sales soared on new launches and easier availability of finance, driving India’s auto index up more than a third from 13 July through Wednesday.

The country’s top lender, State Bank of India, fell 2.4% to Rs1,754.05, while private-sector rival ICICI Bank was down 1.5% at Rs754.

In the broader market, losers led gainers almost 2 to 1 on relatively heavy volume of 152 million shares.

Most Asian shares were lower on Friday, with MSCI’s measure of Asian markets excluding Japan down 1% Japan’s Nikkei edged down 0.2% after falling 1.2% earlier.