Sensex posts biggest weekly fall since March, retreats 153 points
Weakening rupee spurs concern that capital outflows may accelerate
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Mumbai: Indian stocks declined, with the benchmark index completing its biggest weekly loss in four months, as the weakening rupee spurred concern that capital outflows may accelerate.
Jindal Steel and Power Ltd plunged 7.6%, leading a gauge of 10 metal companies to its lowest close in more than four years. ICICI Bank Ltd fell to an 11-month low, pacing losses among its peers. The rupee slid 1.07%, capping its biggest weekly drop in almost two years.
The S&P BSE Sensex declined 0.8% to 19,164.02 at the close in Mumbai, extending this week’s fall to 3%, the most since five days ended 24 March. A gauge of 233 mid-cap companies slid to a 17-month low. The BSE Realty index lost the most, 4.01%, while consumer durables index gained the most, 5.38%, among sectoral indices.
The Reserve Bank of India (RBI) on 30 July cut its growth forecast for the year to March to 5.5% from 5.7%, prompting Goldman Sachs Group Inc. to trim its rating on Indian equities to underweight the next day.
“Outflows are likely to continue despite the government’s efforts to boost investments as the rupee remains a concern," Rajendra Wadher, director with PRB Securities Ltd in Mumbai, said in a phone interview. “We expect economic growth to drop below 5% this year."
Metals, banks
Jindal Steel plunged to ₹ 187, the lowest close since March 2009. Sterlite Industries (India) Ltd slumped 3.9% to ₹ 72.2. The S&P BSE Metal index tumbled 3.7% to its lowest level since April 2009.
ICICI Bank tumbled 3% to ₹ 887.10, the lowest level since September 2012. Mortgage lender Housing Development Finance Corp. Ltd fell 1.1% to ₹ 808.35. The S&P BSE Bankex lost 4.7% this week, extending July’s 14% sell-off. The central bank left its benchmark rate unchanged this week and said increases in other borrowing costs in the past two weeks will be withdrawn only after the rupee stabilizes.
“Banks are falling on concerns their cost of funds will continue to rise as RBI may not be able to lower rates," Deven Choksey, managing director at K.R. Choksey Shares and Securities, said by telephone from Mumbai.
Cigarette maker ITC Ltd dropped 1.9% to ₹ 332.95, the lowest level since 3 July. Hindustan Unilever Ltd lost 3% to ₹ 615.95. The stocks have 15% weighting on the Sensex.
‘Nervous investors’
Financial Technologies (India) Ltd sank 23% after a 65% drop on Thursday. Its unit National Spot Exchange Ltd on 31 July suspended some contracts after the government asked the exchange not to start new obligations until further notice. Multi Commodity Exchange of India Ltd, 26% owned by Financial Technologies, sank by the 20% limit for a second day to ₹ 408.45.
“Investors are nervous as the stability of the financial markets is being questioned," Choksey said.
Power Grid Corp. of India Ltd plummeted 11.2% to ₹ 91.35, the lowest close since March 2009, after the state-run company said it will sell 694 million shares to fund investments. The stock was the worst performer today in the MSCI Emerging Market Index.
Ten of the 15 Sensex members that have posted earnings so far for the June quarter beat analyst estimates. About 27% of companies in the measure missed forecasts for the three months ended March, and 43% in the quarter through December, data compiled by Bloomberg show.
The Sensex has lost 1.4% this year and trades at 13.5 times projected 12-month earnings, down from a 17-month peak of 14.3 times on 23 July. The MSCI Emerging Markets Index trades at 10 times.
Ashwin Ramarathinam contributed to this story.
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