Indian Stocks Join Global Selloff to Cap Worst Week Since May
(Bloomberg) -- Indian stocks declined, tracking losses in global peers, with investors reassessing the strong recent gains amid a steady rise in local virus infections and slowing economic growth.
The S&P BSE Sensex slipped 1.6% to 38,357.18 on Friday, taking its total decline since the close on Aug. 28 to 2.8%, its biggest weekly fall since May. The NSE Nifty 50 Index lost 1.7%.
India has been easing restrictions aimed at curbing the spread of coronavirus even as a recent surge in the contagion weighs on the outlook for economic recovery. Data this week showed gross domestic product shrank 23.9% last quarter, the sharpest decline since the nation started publishing quarterly figures in 1996. The nation has 3.85 million confirmed virus cases, according to data collected by Johns Hopkins University and Bloomberg News, with fatalities at 67,376.
“We see risk reward ratio getting unfavorable at these levels. Advice caution at the current juncture,” said Sanjeev Zarbade, vice president at Kotak Securities Ltd.
Stocks have had a volatile week as market participants adjusted to a new rule from Sept. 1 that requires retail investors to put upfront 20% margin in the form of cash or stock for ‘buy’ or ‘sell’ orders, with penalties for brokers who fail to comply. The National Stock Exchange has decided not to levy penalties on brokers till Sept. 15 to help them transition to the new system.
Reliance Industries Ltd. contributed the most to the Sensex decline, dropping 1.7% while Axis Bank Ltd had the biggest drop of 4.1%.
A gauge of lenders dropped 2.2% after the nation’s top court restrained banks from declaring loans as non-performing assets until further order.
“The court’s decision has made it difficult for banks to assess the stress on their loan books and also the amount of provision they may have to make against them,” said Sameer Kalra, a strategist at Mumbai-based Target Investing.
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