Visitors ride on a swing carousel at dusk on Marina Beach in Chennai, India. (Photographer: Dhiraj Singh/Bloomberg)

India Stocks Swing as Financial Strength of Firms in Focus

(Bloomberg) -- Indian stocks fluctuated as investor concerns over the financial vulnerability of local companies emerged ahead of the federal budget this week. Shares in major Asian markets were in the red after their U.S. counterparts retreated on signs of slowing global growth.

The S&P BSE Sensex fell 0.2 percent to 35,592.50 at the close in Mumbai after swinging between gains and losses nearly a dozen times throughout the day. The broader NSE Nifty 50 Index declined 0.1 percent.

Indian government steps to lower the world’s second-highest ratio of bad loans has led to an increasing number of companies struggling to repay debt amid tougher borrowing conditions. Media owner Subhash Chandra faced the wrath of investors last week after an online news site reported that his Essel Group has links to a company that’s being probed by fraud investigators. All of Essel’s seven listed units plunged last Friday, including a record 27 percent tumble at flagship TV broadcaster, Zee Entertainment Enterprises Ltd.

The government will present its federal budget on Friday. Of the 18 NSE Nifty 50 Index companies that have announced results so far, 11 have either met or exceeded analyst estimates.

The Numbers

  • Nine of the 19 sector indexes compiled by BSE Ltd. dropped, led by a gauge of energy companies
  • Housing Development Finance Corp Ltd. and HDFC Bank Ltd. were among the biggest drags on the gauge while Yes Bank Ltd. was the worst performer
  • Praj Industries Ltd. climbed 16%, while Persistent Systems Ltd advanced 3.3% after earnings beat analyst estimates
  • Adani group shares including Adani Power Ltd. and Adani Ports & Special Economic Zone Ltd. rebounded after sliding in the previous session

Strategist View

  • “The recent up move had provided bears another chance to go short on the market, and investors need to be cautious as technical charts indicate a downside wave,” says Rajendra Kumar Wadher, a Mumbai-based director at PRB Securities Ltd.
    • “Markets are likely to make a new lower bottom after the budget, and we see the Nifty 50 at 9,600-9,900 by mid-March and a further drop to 9,300-9,400 by the end of the fiscal year”

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