Indian Shares Head for Worst Month in Nine Amid Foreign Outflows
Indian equities declined after a fluctuating start and key indexes were headed for their worst month since October last year.
(Bloomberg) -- Indian equities declined and the benchmark index headed for its worst month since October amid a sell-off by foreign investors.
The S&P BSE Sensex fell 0.5% to 37,686.37 at the close in Mumbai, its seventh day of decline in the past eight sessions. It has retreated more than 4% this month. The NSE Nifty 50 Index slid 0.8% to 11,189.20, extending its monthly fall to more than 5%, the steepest since September 2018.
Foreigners have pulled out more than $2 billion in July, after the government’s spending plan earlier this month failed to excite investors, levying an additional tax on higher incomes. That has sent key equity indexes down more than 6% from their record closes in June. Focus will now shift to the U.S. interest-rate decision on Wednesday -- with an expected cut of 25 basis points -- and a local monetary policy meeting on Aug. 7, with a similar reduction expected.
Strategist View
- “With an expected rate cut by the U.S. and continued easing of monetary policy locally, appetite for risk assets such as stocks is likely to increase,” said Purvesh Shelatkar, head of institutional brokering at Monarch Networth Capital Ltd. in Mumbai.
- Still, the global slowdown and continued sell-off in local equities by foreigners remain “key risks,” he said.
The Numbers
- Sixteen of the 19 sector indexes compiled by BSE Ltd. retreated, paced by a gauge of automobile stocks. Twelve of these measures dropped more than 1%.
- Outflow of more than $2 billion from overseas investors so far this month is the most in nine months.
- Twenty-three of the 31 Sensex members and 42 of the 50 Nifty companies fell.
- Indiabulls Housing Finance Ltd. slid 10%, the most among Nifty members, after a letter written by a lawmaker from the ruling national party accused it of embezzlement of funds. The mortgage financier denied the allegations in an exchange filing.
- ICICI Bank Ltd. gained the most among Sensex and Nifty stocks, rising 3.3%, after reporting a drop in bad loans.
- Vodafone Idea Ltd. slumped 27%, a record fall, after reporting a wider-than-estimated loss in the three months ended June. The wireless carrier also lost its spot as the company with most subscribers in India as rival Reliance Jio Infocomm Ltd. replaced it when the latest numbers were released for July.
Analyst Notes/Market-Related Stories
- India’s $10 Billion Overseas Debt Sale: Investors Debate Options
India’s Finance Minister Seeks ‘Significant’ Rate Cuts from RBI
- Fed Set to Cut Rates During World Economy’s Biggest Week of 2019
To contact the reporter on this story: Ameya Karve in Mumbai at akarve@bloomberg.net
To contact the editors responsible for this story: Lianting Tu at ltu4@bloomberg.net, Kurt Schussler
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