India Stocks Decline as Second-Wave Worries Drag Global Markets
The yield on the most traded 6.45% 2029 bond dropped by one basis point to 5.98%, with rupee weakening to 75.9425 per U.S. dollar.
(Bloomberg) -- India stocks declined as signs that a second wave of the pandemic is emerging sparked a sell off in global equities.
The S&P BSE Sensex slid 1.6% to a two-week low of 33,228.80 in Mumbai. The benchmark index on Friday completed its worst week in four, falling 1.5%. Asian equities lost about 2.4%, on track for the worst day since March 23, while futures on the S&P 500 tumbled as much as 3.3%.
“Factory output data, negative global cues and concern around India’s rising coronavirus cases are dragging down the market,” said Anita Gandhi, an investment adviser at Arihant Capital Markets Ltd. in Mumbai.
India has allowed private companies, factories and shops to resume partial operations even as Covid-19 cases continue to rise and are now among the highest in Asia. Wholesale prices in May contracted 3.21% from a year earlier, government data showed today, exceeding the 1.2% drop predicted by economists in a Bloomberg survey.
“Fear of the virus spreading as the economy opens up and volatility in global markets will play a critical role,” said Ajit Mishra, vice president of research at Religare Broking Ltd. in Mumbai. Investors will also watch for progress in the southwest monsoon, which waters more than half of India’s farmland.
Widespread rain is expected in parts of country’s west coast and northeastern region during the next five days, the weather office said on Sunday. As an extended reporting season continues, 12 out of 39 Nifty 50 companies that have reported quarterly results so far have beaten or matched analyst estimates.
The yield on the most traded 6.45% 2029 bond dropped by one basis point to 5.98%, while the rupee weakened 0.3% to 76.0313 per U.S. dollar.
Reliance Rights
Reliance Industries Ltd. gained 1.6% to a lifetime high, as shares of India’s largest company sold in a rights offer began trading. Shareholders got one rights share for every 15 held, at 1,257 rupees each, lower than Friday’s closing of 1,588.80 rupees.
Investors who bought into the $7 billion rights have to pay in installments. A 314.25 rupees-per-share amount was due May 17, with a further 314.25 rupees apiece to be paid by May next year, and the balance by November 2021.
The partly-paid up stock ended the day at 700.85 rupees, up 8.5% over its previous close, estimated at 646.05 rupees. The stock briefly hit an upper circuit of 710.65 rupees in early trade.
The previous close is arrived at by adding the first installment of 314.25 rupees to the difference between Friday’s closing price (1,588.80 rupees) and the rights price (1,257 rupees). That works out to 646.05 rupees.
“The rights shares are attracting interest from small investors, who have to shell out less for the partly-paid stock versus the regular Reliance shares,” said Premal Sanghvi, a remisier -- a broker paid on commission -- at Sharekhan by BNP Paribas in Mumbai. “With the money that Jio is attracting, retail investors are bullish on Reliance.”
A Texas-based private equity firm and a fund backed by luxury retailer LVMH added $850 million to the surge of investment in Jio Platforms Ltd., the telecom and digital services business of Reliance, according to separate statements dated June 13. Reliance has raised $13.7 billion from a clutch of well-known global investors since April.
The Numbers
- All but two of 19 sector sub-indexes compiled by BSE Ltd. declined, led by a gauge of banks
- HDFC Bank Ltd. contributed the most to the Sensex decline, decreasing 3.3% while IndusInd Bank Ltd. had the largest drop, falling 7.3%%
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