Worst July in 17 Years for Indian Stocks Dims Revival Hopes
People look up at a screen and electronic ticker board outside the Bombay Stock Exchange (BSE) building in Mumbai, India. (Photographer: Dhiraj Singh/Bloomberg)

Worst July in 17 Years for Indian Stocks Dims Revival Hopes

(Bloomberg) -- Indian stocks just suffered their worst July in 17 years, and if history is to be believed, there is little hope that August will be much better.

The S&P BSE Sensex slipped to its lowest level in almost five months Thursday, extending last month’s 4.9% retreat, as the disappointment with the new budget, tepid earnings season and the ongoing credit crunch remained a drag on sentiment. The index has fared better in August than July in only five years since 2002, data compiled by Bloomberg show.

Worst July in 17 Years for Indian Stocks Dims Revival Hopes

“We are going into August with low expectations, rather no expectation at all,” said Rajiv Singh, chief executive officer of Hyderabad-based Karvy Stock Broking Ltd. “Market should pick up the threads from here and hope it won’t get worse than this.”

The Sensex is down 8% from its record high in early June after the release of the federal budget plan that raised taxes but offered little stimulus to revive growth. The Reserve Bank of India has been accommodative and is expected to deliver another rate cut this month, which may help boost demand ahead of the holiday season which starts in September.

Hindustan Unilever Ltd., India’s largest consumer goods company, saw volumes fall to a seven-quarter low in the June quarter on account of weak rural sales. The nation’s largest car maker Maruti Suzuki India Ltd. on Thursday reported a 33.5% slump in July sales from a year earlier, the worst in almost seven years.

“Business earnings continue to elude us and the commentary from consumer companies too don’t indicate that things might quickly mend in the coming quarters,” said Dharmesh Kant, head of retail research at Mumbai-based Indianivesh Securities Ltd. “If the slowdown persists into the festival season, FY20 too will have to be written off.”

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