Indian stocks tumbled for a second day as investors refrained from taking new bets before next week’s federal budget and as losses in Asian equities deepened.
NTPC fell for a third day after the government sold shares in the top power producer at a discount. Bharat Heavy Electricals, the biggest power-equipment maker, plunged to a 10-year low. HDFC Bank is heading for its worst monthly loss in four years. ITC, India’s biggest cigarette company, fell to a 30-month low.
The S&P BSE Sensex plunged 1.4% to 23,088.93 at the close in Mumbai. Investors are looking ahead to key events over the next few days, including Finance Minister Arun Jaitley’s budget for the financial year starting April 1 on Monday. Appetite for equities continued to sour in Asia as oil’s drop and a revival in demand for low-risk assets saw stocks from Japan to Australia decline with emerging-market currencies.
“The budget impact will last a few days, after which we will start talking about global cues, corporate earnings and fundamentals,” Daljeet Singh Kohli, head of research at India Nivesh Securities, said in an interview with Bloomberg TV India. “Unfortunately, there’s no positive news on any of those.”
Oil’s retreat is weighing on global stocks along with concerns about growth in China, the world’s second-biggest economy. A gauge of expected volatility in American equities rose for the first time in seven sessions as the swing back to losses reminded investors of the sense of uncertainty that has persisted in global markets since the start of the year. The risk that UK citizens will vote to leave the European Union in June is weighing on the British currency.
Overseas investors bought a net $118.2mn of Indian stocks on Tuesday, paring this year’s outflow to $2.3bn. Still, they have been net sellers on all but one of the past 15 days, data compiled by Bloomberg show.
The government will also unveil the railway budget on Thursday and the economic survey, a summary of the various policy initiatives over the last year, on Friday. The expiry of monthly derivative contracts, which is often preceded by an increase in volatility, is also tomorrow.
Bharat Heavy Electricals tumbled 5.1%, extending this year’s loss to 45%. HDFC Bank retreated 2.1%. The stock has dropped 9.6% in February, heading for its worst month since November 2011.
ICICI Bank decreased 2.6% to its lowest level since February 2014. State Bank of India lost 1.4%, extending this year’s decline to 30%.
ITC slid 2.1%, taking this month’s decline to 10%, set for its worst since the period October 2008. Tata Motors, owner of Jaguar Land Rover, decreased the most since February 16. Oil & Natural Gas Corp, the largest state-owned explorer, slid 2.4%, ending a five-day, 7.3% advance.
Sugar mills’ shares bucked the downtrend in the broader market after global raw-sugar prices surged the most in at least 22 years on Tuesday. Balrampur Chini Mill and Bajaj Hindusthan Sugar both climbed the most in a week. EID Parry added 1.7%. Prices rose after the International Sugar Organisation increased its forecast for an output deficit in the current crop year on rising concern about the impact of the El Nino weather pattern on supplies.
Meanwhile the rupee yesterday closed little changed against the US dollar as traders avoided taking huge positions ahead of the Union budget, scheduled to be presented on February 29. The rupee is just 0.4% away from its all-time low of 68.85, hit on August 28, 2013.
The currency closed at 68.56, up 0.03% from its previous close of 68.59. The local currency opened at 68.63 a dollar and touched a high and a low of 68.49 and 68.64, respectively in intraday trade.
Since the beginning of this year, the rupee has lost 3.5%, while foreign institutional investors have sold $2.31bn from local equity and $414.7mn in bond markets.
The yield on India’s 10-year benchmark bond closed at 7.825% against Tuesday’s close of 7.822%. Bond yields and prices move in opposite direction.
The rupee closed at 68.56 yesterday, up 0.03% from its previous close