The rupee was steady at 66.84 a dollar yesterday, halting a five-day run of declines
Bloomberg
Mumbai
Indian stocks slid for a sixth day, with the benchmark gauge at a three-month low, amid concern over the passage of the goods-and-services tax bill in parliament and continued outflows from local equities by overseas investors.
Gati capped its biggest two-day decline in more than three months, pacing losses among logistics and delivery companies that would benefit from the unified tax bill. Bharti Airtel, the largest mobile-phone operator, decreased to its lowest level since May 2014. Vedanta, the biggest copper producer, was the top loser on the main gauge.
The S&P BSE Sensex tumbled 1.1% to 25,036.05, the lowest close since September 7. The parliament was disrupted for a second day after the opposition Congress party protested a court order for its leaders Sonia Gandhi and her son Rahul to testify in a corruption case filed by a member of the ruling Bharatiya Janata Party.
The roadblock risks further delays to the tax bill that is the centerpiece of Prime Minister Narendra Modi’s reform push.
“The GST bill is important for the markets, but more fundamentally, for the country,” Madhav Dhar, a New Delhi-based managing partner at GTI Capital Group, an India-focused investment firm, said in an interview with Bloomberg TV India yesterday. “I hope that this is just another little squall and things will settle down.”
The complaint against the Gandhis accuses them of forming a company to cheaply acquire Rs20bn ($300mn) of property assets from a defunct newspaper that served as the Congress party’s mouthpiece for eight decades.
The Congress party leaders have denied wrongdoing and say the case is politically motivated. Modi’s camp says it has nothing to do with the proceedings and independent courts will determine what happened.
Gati plunged 7.9%, extending Tuesday’s 5.7% decline. Gateway Distriparks fell 1%, ending two days of advance. VRL Logistics tumbled 2.1% to its lowest level since November 20. Snowman Logistics plunged 4.1%, taking this week’s retreat to 10%.
Transport Corp of India fell 8.8%, while Allcargo Logistics slid 5.2%. Container Corp Of India declined 5.9%.
Bharti Airtel fell 2.2%. Vedanta tumbled 5.6% to the lowest level since August 24. The stock has slumped 62% in 2015. Tata Steel and Hindalco Industries, an aluminum maker, decreased at least 3%.
International investors sold a net $6.3mn of Indian stocks on December 7, reducing the year’s inflows to $2.9bn. They pulled $1.1bn in November as the US Federal Reserve prepares to raise borrowing costs for the first time since June 2006.
Futures are indicating an 80% probability that the Fed will raise rates at a meeting next week.
The Sensex has fallen 9% this year and trades at 14.8 times projected 12-month earnings. The MSCI Emerging Markets Index is valued at a multiple of 10.9.
Meanwhile the rupee was steady at 66.84 a dollar yesterday, halting a five-day run of declines that was the longest since August, according to prices from local banks compiled by Bloomberg. The currency fell 2.1% last month in Asia’s worst performance.
India’s 10-year sovereign bonds advanced as a jump in the yield to a three-month high lured investors.
The yield on notes due May 2025 fell two basis points yesterday, the most since December 3, to 7.78% in Mumbai, according to prices from the Reserve Bank of India’s trading system. It climbed four basis points on Tuesday to 7.80%, the highest close since September 7, amid a drop in global holdings of local bonds ahead of a potential increase in US interest rates.
“The recent advance in yields offered a bargain-buying opportunity for some investors,” said Vijay Sharma, executive vice president for fixed income at PNB Gilts in New Delhi. The Fed meeting remains a “key” event, he said.
Futures contracts show an 80% chance the Federal Reserve will raise borrowing costs at its December 15-16 meeting. Foreign holdings of Indian sovereign and corporate notes have fallen Rs13.6bn ($203mn) in December, National Securities Depository data show.
They declined Rs46.9bn last month, the most since May, contributing to a 15- basis point increase in the 10-year yield that was the biggest since June.
Investor sentiment has been damped also as Prime Minister Narendra Modi struggles to push through economic reforms.
