Indian shares fell sharply yesterday to close at their worst levels since mid-May, as investors fretted over weak corporate earnings and the government’s refusal to tweak the surcharge on foreign investors.
The broader NSE Nifty dropped 1.53% to 11,419.25, while the benchmark BSE Sensex closed 1.44% lower at 38,337.01. The indexes posted their second straight weekly loss.
Whatever hopes there were around the finance minister removing the surcharge on foreign investors have been dashed, said Neeraj Dewan, a director with Quantum Securities, New Delhi, adding that sentiment had also been dampened by weak earnings by some lenders.
Finance Minister Nirmala Sitharaman said on Thursday that foreign portfolio investors could instead register as companies to avoid a new tax surcharge imposed on individual tax payers as well as trusts in the budget for the fiscal year that began on April 1.
Corporate earnings for the June quarter have also failed to impress investors, with several lenders flagging stress in their books. IT heavyweight Tata Consultancy Services Ltd, which kicked off the results season last week, also reported lower margins.
Financial and auto stocks accounted for most of the losses. Bajaj Finance Ltd declined 4.2%, while Indiabulls Housing Finance Ltd dropped 3.7%. RBL Bank Ltd plunged 13.7% to its lowest close since Oct. 29 after the lender highlighted risks to its asset quality, despite reporting a 41% jump in quarterly profit.
Yes Bank Ltd reported a weak quarter earlier this week, sparking a sell-off in its stock. Its shares declined 3% in the current session.
Auto maker Mahindra and Mahindra Ltd was the biggest loser in the market, sliding 4.4% to its lowest close since Feb. 2016, while peers Tata Motors Ltd and Eicher Motors Ltd dropped 3.7%-4%, driving the Nifty Auto index 3.3% lower.
Meanwhile, electricity producer NTPC Ltd was the top gainer among the seven stocks in the green on the NSE Nifty, closing 2.2% higher. Meanwhile the rupee strengthened against the US dollar yesterday, with traders expecting a more aggressive policy easing by the US Federal Reserve.
The Indian currency closed at 69.81 a dollar, up 0.22%, from its previous close of 69.96. The currency opened at 69.77 a dollar, touching a high of 69.74, and a low of 69.95.
The 10-year bond yield closed at 6.364% from Thursday’s close of 6.387%. Bond yields and prices move in opposite directions.
The Sensex fell 1.44%, or 560.45 points, to close at 38,337.01. Since January, it has gained 6.29%.
So far this year, the rupee has gained 1.40%. Foreign investors have bought $10.30bn and $2.52bn in equity and debt markets, respectively.
Most Asian currencies were trading higher. South Korean Won gained 0.360%, Indonesian rupiah climbed 0.158%, Thai baht rose 0.130%, Hong Kong dollar gained 0.127%, Taiwan dollar rose 0.100%, China renminbi was up 0.025%, Philippines peso was up 0.023% and Malaysian ringgit gained 0.022%.
However, Japanese yen lost 0.344%, Singapore dollar dropped 0.177% and China Offshore was down 0.092% .
The dollar index, which measures the US currency’s strength against major currencies, was trading at 96.996, up 0.21%, from its previous close of 96.794.
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