Mumbai: India’s smaller companies tumbled and the nation’s benchmark stock index approached a bear-market zone as concerns about slowing global economic growth dragged down Asian equities.

Indian Hotels Co. Ltd fell the most in 17 months after its third-quarter net profit fell 84% from a year earlier. Wockhardt Ltd extended last week’s 19% drop after saying the US FDA made nine observations after inspection of its plant in Shendra, Aurangabad. Reliance Industries Ltd (RIL) and Bajaj Auto Ltd were among the biggest decliners on the S&P BSE Sensex.

The S&P BSE SmallCap index fell 4.1% after capping its worst weekly loss in four years on Friday amid concerns about high valuations. The Sensex lost 1.1%, coming within a whisker of entering a bear market, as global funds withdrew a net $172 million of shares on 14 January, taking this year’s outflow to $686 million.

The S&P BSE MidCap index is valued at 24 times reported profits and the small-cap index trades at 53 times, compared with the Sensex’s multiple of 18.3. The valuation gap leaves “room for further declines" in the smaller companies’ shares, Alex Mathews, head of research, Geojit BNP Paribas Financial Services Ltd, said by phone from Kerala.

The worst start to a year for global stocks extended into a third week as oil sank to a fresh 12-year low. Brent crude briefly fell below $28 a barrel as Iran pledged to boost exports and Nomura Holdings Inc. predicted a potential drop to $25. The energy slump is fueling concern over disinflation, just as the US embarks on tighter monetary policy and as anxiety over China’s management of its slowing economy rattles markets.

The Sensex has slid 18.5% from its January 2015 peak, nearing the 20% level that some investors consider bear-market territory. The gauge has erased nearly all gains recorded after Prime Minister Narendra Modi’s party swept to power in May 2014, as news out of China coincided with the waning of euphoria surrounding Modi’s economic agenda.

Indian Hotels fell 4.5%, the most since August 2014. Wockhardt plunged 6.22%, taking this month’s loss to 21%. RIL tumbled 5.14%, the most since 24 August. Bajaj Auto shed 3.67% to its lowest level since 23 September. Asian Paints Ltd fell 3.3%.

The Nifty 50 lost 1.2% to close at 7,351 after taking support at 7,336 in last few minutes of trade. Bloomberg

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