India’s consumer companies countered a rally in energy stocks yesterday as the benchmark equity index declined for a fourth day amid thin volumes.
Asian Paints fell to a seven-month low, the worst performer on the S&P BSE Sensex. Indian Oil Corp advanced 2.9% to pace a rally in energy shares as the biggest state-run refiner raised gasoline and diesel prices on the weekend.
Indian stocks have been battered since November after Prime Minister Narendra Modi’s shock decision to scrap high-value currency bills hurt demand in an economy where almost all consumer payments are made in cash. Gross domestic product, which grew a slower-than-estimated 7.3% in the September quarter, will contract to 6.5% over the next three months, according to the median estimate in a Bloomberg survey.
“There’s confusion about the economic direction,” Nikhil Khandelwal, managing director of institutional equities at Mumbai-based Systematix Shares & Stocks, said on phone. The NSE Nifty 50 Index will trade in the 7,950-8,300 range until the government announces the federal budget in February, he said.
Trading volumes on the Nifty, which fell 0.4% to 8,104.4 yesterday, were 46% below the 30-day daily average. Activity is expected to remain sluggish in the coming weeks before the December holiday season and end of the year, Khandelwal said.
Overseas investors turned net sellers of Indian shares in the five days through Friday, the ninth such week in the past 10, data compiled by Bloomberg show.
Sun Pharmaceutical Industries retreated 2.3% to its lowest closing price since June 2014. The shares were cut to neutral from outperform at Credit Suisse and the 12-month price estimate was reduced 23% to Rs620. Laurus Labs surged 12% in its trading debut after its initial share sale got bids for about 99.6mn shares versus 21.9mn offered.
Meanwhile the rupee yesterday closed two week low against the US dollar after local equity markets closed lower for the fourth consecutive sessions. The rupee closed at 67.88 per US dollar—a level last seen on December 6, down 0.15% from its previous close of 67.77. The home currency opened at 67.81 a dollar and touched a high and a low of 67.71 and 67.88 respectively. So far this year, it has fallen 2.6%.
The benchmark 10-year government bond yield closed at 6.51%, compared to Friday’s close of 6.506%. Bond yields and prices move in opposite directions.
So far this year, foreign institutional investors have bought $4.04 billion in equities and sold $6.46 billion in debt. Fall in Asian currencies also weighted the rupee. South Korean won was down 0.27%, Singapore dollar 0.22%, Philippines peso 0.18%, Thai Baht 0.06%, Hong Kong dollar 0.04%. However, Japanese yen was up 0.57%, China Offshore 0.3%, China renminbi 0.18% and Indonesian rupiah 0.05%.
The dollar index, which measures the US currency’s strength against major currencies, was trading at 102.85, down 0.1% from its previous close of 102.95.
The dollar retreated versus most major peers, as heightened geopolitical tensions over China’s seizure of a US naval drone added to reasons for traders to pull back amid the greenback’s strongest rally since 2008, Bloomberg reported.