Sensex Extends Losing Streak to Nine Days, Longest Since 2011

(Bloomberg) -- Indian equities declined over concerns that India may escalate its response to a deadly attack on its armed forces last week, while uncertainty about the outcome of the national elections also weighed on sentiment. The key gauges reversed an earlier advance in the last hour of trade, while indexes tracking mid- and small-cap shares held on to their gains.

The benchmark S&P BSE Sensex dropped 0.4 percent to 35,352.61 at the 3:30 p.m. close in Mumbai, extending its decline to a ninth day, its worst run since May 2011. The NSE Nifty 50 Index retreated 0.3 percent. Both gauges reversed a gain of as much as 0.8 percent.

Even as outlook on India’s economy and corporate earnings remains buoyant, uncertainty about the outcome of national polls in May weighs down sentiments as Prime Minister Narendra Modi’s re-election bid has turned out to be tougher than earlier estimated. Investors also assess the cost and scope of the nation’s retaliation to an attack on its security forces.

Sensex Extends Losing Streak to Nine Days, Longest Since 2011

Strategist Views

  • “There’s no conviction to invest and this is amply indicated by today’s market move,” said Sushant Kumar, fund manager for equity at Raay Global Investments Pvt. “Markets hate uncertainty and there is plenty of that currently regarding the election outcome and India’s friction with Pakistan.”
  • “There are no reasons for the markets to rise as no one knows the outcome of the national polls, leading to uncertainty about what the next government will be,” Andrew Holland, chief executive officer at Avendus Capital Ltd. in Mumbai, said.
    • “There are still lingering worries over the property and the non-bank finance businesses, which aren’t going away; cross-border escalation is adding to the already existing volatility,” he said.
  • “We expect the markets to be range-bound till election results; mid-sized stocks look attractive now and over-valuation is no longer a concern after the steep fall they have been through,” said Sampath Reddy, chief investment officer at Bajaj Allianz Life Insurance Co. in Pune.

The Numbers

  • Twenty-five of the 50 Nifty shares and 18 of the 31 Sensex stocks fell, paced by Tata Consultancy Services Ltd.’s 3.3 percent decline. The biggest software exporter in Asia extended its fall to a fourth day.
  • Six of the 19 sector indexes compiled by BSE Ltd. retreated, led by a gauge of software stocks. The S&P BSE Realty Index topped the wider benchmark with a 1.7 percent rally.
  • The S&P BSE MidCap and S&P BSE SmallCap indexes rose at least 0.3 percent, paring gains of as much as 1.3 percent.
  • Emami Ltd. jumped 13 percent, the most since December 2010, after its founders on Monday sold 10 percent stake for 16 billion rupees to reduce debt.

Analyst Notes/Market-related Stories

  • India Surpasses Italy for World’s Worst Soured-Loan Ratio: Map
  • Dr. Reddy’s upgraded to Buy at CLSA; Price Target 3,200 Rupees
  • The Risk of Fallen Angels in Asia’s Bond Market Is Rising

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