Financials drag markets to end 3% down

Financials drag markets to end 3% down

Mumbai: Indian shares fell for a sixth session on Wednesday, sliding 2.9% to their lowest close in nearly 12 weeks, as investors joined a regional sell-off on concerns China’s efforts to cool credit demand could hurt global recovery.

Financial stocks led the drop on caution ahead of the Reserve Bank of India’s (RBI) monetary policy on Friday that is widely expected to tighten banks’ reserve requirements.

The 30-share BSE index dropped 2.92%, its biggest one-day fall in nearly three months, and ended down 490.64 points at 16,289.82. Only one of its components closed in the green.

It posted the longest run of losses in nearly three months and matched a six-day slide to early November last year.

A.V. Srikanth, executive director of private wealth management at Anand Rathi Financial Services, said the market was catching up with falls in Europe and Asia since Tuesday, when the domestic bourse was closed for a holiday.

“We are bearing the brunt of yesterday’s and today’s decline in world stocks," he said. “People are also jittery before the RBI policy."

Global stock markets fell again on Wednesday as investors were worried about a monetary squeeze from central banks around the world and also the impact of tightening US banking regulation.

Foreign funds have pulled out $676 million from Indian equities in the last four sessions. They had moved in $17.5 billion in 2009 and powered a 81% rally in the main index.

Top lender State Bank of India fell as much as 5.7% as investors worried about its outlook and asset quality after it reported December quarter results on Monday evening.

State Bank said it expected steady loan growth for the full year but warned that surplus deposits and higher bad debt could impact profits in the March quarter.

“Though margin improvement was better than expected but increase in NPAs (non-performing assets), lower coverage and increase in duration risk remain overhangs on SBI’s earnings, in our view," JPMorgan said in a note obtained by Reuters.

State Bank ended down 5.1% at Rs1,987.15, while rival ICICI Bank dropped nearly 5% to Rs790.20.

Metals makers fell as an appreciating dollar and on worry further policy tightening in China and proposed US bank regulations could stifle demand for metals.

Tata Steel, the world’s eighth-largest steel maker by output, dropped 8.5% to Rs558.70 while non-ferrous metals producer Sterlite Industries shed 4% to Rs770.05.

Aluminium maker Hindalco fell 5.7% to Rs150.10. Its December quarter net profit had dropped 22% and missed the street view.

Export-focused outsourcers declined on fears US president Barack Obama’s plan to limit risk-taking by banks might hit their order flow.

Infosys Technologies and Tata Consultancy Services lost 1.6% each, while Wipro shed 5.8%.

Energy giant Reliance Industries, which has the highest weightage on the main index, closed 1.5% lower at Rs1,025.85.

On the Bombay Stock Exchange, around 8 shares declined for every one share that gained on volume of 444 million shares, lower than last week’s daily average of 534.4 million.

The 50-share NSE index closed down 3.1% at 4,853.10.