BackSensex falls 134 points on Cyprus bailout, rate cut concerns
Shares of Tata Motors and Maruti Suzuki, ICICI Bank and state-run oil retailers decline
Premium(Hemant Mishra/Mint)
Mumbai: Indian shares fell for a second consecutive session on Monday as interest rate-sensitive stocks were hit a day before the central bank reviews monetary policy, while broader sentiment was hurt after a radical bailout plan for Cyprus spooked global markets.
The surprise decision by euro zone leaders to partially fund a bailout of Cyprus by taxing bank deposits, sent shockwaves through financial markets on Monday by shaking depositors’ confidence in banks across Europe. The MSCI Asia-Pacific index excluding Japan fell 1.7%.
Sentiment was also hit after Moody’s Investors Service said India’s sustained food inflation was a negative for the country’s sovereign ratings as it exacerbated macroeconomic imbalances.
“RBI rate cut announcement may not impact much, but stance on further rate cuts would," said Deven Choksey, managing director of K.R. Choksey Securities in Mumbai.
The benchmark BSE index fell 0.69%, or 134.36 points, to 19,293.20, marking its lowest close since 6 March. The broader NSE index, the Nifty, fell 0.64%, or 37.35 points, to 5,835.25.
The RBI cut interest rates and the cash reserve ratio by 25 bps each in end-January, but surprised investors with a cautious stance on monetary policy outlook. That is giving added importance to the central bank’s statement that will accompany its rate decision on Tuesday.
Interest rate-sensitive stocks fell before the review, with Tata Motors Ltd ending down 1.55% and Maruti Suzuki India Ltd falling 2.98% .
Banks were also hit, with private sector lenders still reeling from money laundering allegations made by a journalist last week.
ICICI Bank Ltd fell 1.5% after India’s No. 2 lender said it had suspended 18 employees pending an internal inquiry into the allegations.
Among other decliners, state-run oil retailers fell after lowering petrol prices by ₹ 2 per litre, while keeping diesel prices steady.
Indian Oil Corp. Ltd lost 2.24%, Bharat Petroleum Corp. Ltd fell 2.23%, while Hindustan Petroleum Corp. Ltd retreated 1.47%.
Shares of Coal India Ltd slumped 5.41% after government sources said the government was planning to sell a 10% stake in the company.
Jet Airways (India) Ltd fell as much as 13.6% after local media reported a planned deal to sell a stake to Abu Dhabi’s Etihad may be called off, but shares sharply pared losses to end down 2.70% after the carrier called the reports “incorrect".
However, among gainers, Larsen and Toubro Ltd (L&T) rose 0.13% after The Economic Times reported its infrastructure unit was looking to raise ₹ 2,500 crore by selling up to a 20% stake to investors.
A spokesman for L&T declined to comment when contacted by Reuters.
Bajaj Hindusthan Ltd gained 1.15% and Shree Renuka Sugars Ltd rose 1.7% on hopes the Indian cabinet would remove a requirement that they sell a portion of their sugar output to the government at reduced prices. Reuters
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