Indian stocks dropped, extending their losing streak to a fourth day, on concern that the rising virus count and deteriorating health of companies will put the nation’s grim economic state back on investors’ radars.
The S&P BSE Sensex declined 1.8% to 36,939.6 points in Mumbai, marking its longest losing streak since March. The benchmark gauge last week capped its best two-month performance since 2009 as investors looked past the worst economic outlook in more than 40 years and the third-highest coronavirus case-count globally.
The NSE Nifty 50 Index lost 1.6% yesterday.
“The number of Covid cases is rising and there is an in-built correction on the cards after Nifty gained steadily over the last 4-5 months,” said Sanjiv Bhasin, an analyst at IIFL Securities Ltd in Mumbai, “We think August could be a difficult month for stocks.”
India’s Home Minister, Amit Shah, a close aide of Prime Minister Narendra Modi, tested positive for coronavirus as domestic cases rose to 1.75mn. The country has one of the world’s fastest growing epidemics, adding more than 50,000 cases each day. Corporate financial health is also deteriorating, with bond investors starting to demand more protection.
Of the 30 Nifty 50-member companies that have announced results so far, 20 exceeded or matched estimates, according to data compiled by Bloomberg. None are scheduled to post earnings today.
The yield on the 10-year bond was little changed at 5.84%, while the rupee weakened 0.3% to 75.01 against the US dollar.
Fourteen of 19 sector sub-indexes compiled by BSE Ltd fell, led by a gauge of banks.
Twenty-four Sensex shares dropped while five rose.
Reliance Industries Ltd was the biggest drag on the index with a 2.8% fall, while Kotak Mahindra Bank Ltd’s 4.4% drop was the steepest.
Meanwhile the Indian rupee slumped 20 paise yesterday to close at a two-week low against the US dollar, tracking weakness in domestic equities.
The Indian unit closed at 75.01 against the American currency – a level last seen on July 17 – down from its previous close of 74.82. The local currency had opened at 74.90 and swung between a high of 74.88 and a low of 75.03. Year to date, the Indian currency has shed 4.84%.
The dollar index, which gauges the greenback’s strength against a basket of six currencies, rose 0.15% to 93.49.
The benchmark Sensex settled 667.29 points 1.77% lower at 36,939.60, while Nifty 50 closed at 10,899.85, down 173.60 points or 1.57%.
Foreign institutional investors have net sold $1.17bn and $14.61bn in equity and debt markets respectively since the beginning of 2020, while domestic institutional investors invested Rs78901.24 crore in stocks, according to data on the exchanges.
Brent crude futures were down 0.69% at $43.22 per barrel, providing a cushion to the rupee. India is one of the largest importers of crude oil and a fall in global prices helps keep the import bill in check.
Among Asian currencies, Indonesian Rupiah fell 0.21%, Korean won lost 0.20% and Taiwan dollar was down 0.19%.
However, Japenese yen was up 0.22%, Malaysian ringgit rose 0.36% and Thai baht gained 0.15%.
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