Indian equities declined, halting their longest run of gains in three weeks, as economic growth concerns resurfaced amid a steady increase in new infections.
The S&P BSE Sensex fell 0.1% to 38,369.63 points in Mumbai, after rising for four straight sessions. The NSE Nifty 50 Index also declined by a similar magnitude.
The nation’s factory output slid for a fourth month in June as the economy struggled to reopen amid the still-spreading pandemic, according to government data released after market hours Tuesday. High-frequency indicators from purchasing managers’ surveys to fuel sales also show activity levelling off in July.
“The factory output data suggests that we are still a long way from recovery,” said Anita Gandhi, an investment adviser at Arihant Capital Markets Ltd in Mumbai. “The recent gains have also prompted investors to book profit.”
The Sensex has surged more than 45% from its March lows in one of the best rebounds globally from the depths of the sell-off. The rebound has made shares expensive, with the gauge’s blended forward 12-month price-to-earnings ratio trading two standard deviations above the 10-year average, data compiled by Bloomberg show.
As earnings continue, 25 of the 38 Nifty 50-member companies that have announced results so far have beaten or matched estimates.
The rupee weakened 0.1% to 74.8275 per US dollar, while the yield on 10-year government bonds fell 2 basis points to 5.89%.
Eleven of 19 sector sub-indexes compiled by BSE Ltd declined, led by a gauge of healthcare stocks.
Kotak Mahindra Bank Ltd contributed the most to the Sensex decline and had the largest move, decreasing 2.1%.
HCL Technologies Ltd provided the biggest boost to the index and had the largest gain, advancing 4.9%.
Meanwhile the rupee slipped 5 paise to close at 74.83 (provisional) against the US dollar yesterday tracking muted domestic equities. The local unit opened at 74.78 at the interbank forex market, then lost ground and finally settled at 74.83 against the US dollar, down 5 paise over its last close of 74.78.
During the session, the domestic unit witnessed an intra-day high of 74.77 and a low of 74.93 against the greenback. The dollar index, which gauges the greenback’s strength against a basket of six currencies, fell 0.03% to 93.59.
Forex traders said rupee traded in a narrow range as muted domestic equities and weak Index of Industrial Production (IIP) data weighed on investor sentiment, while sustained foreign fund inflows supported the rupee and restricted the fall.
India’s industrial production declined 16.6% in June on account of disruption in normal business activity following the outbreak of coronavirus pandemic.
The decline in factory output was widespread across the sectors, including manufacturing, mining, power generation, capital goods and consumer durables, as per the data released by the Ministry of Statistics and Programme Implementation.
Foreign institutional investors were net buyers in the capital market as they purchased shares worth Rs1,013.66 crore on Tuesday, according to provisional exchange data. Brent crude futures, the global oil benchmark, rose 0.99% to $44.94 per barrel.
Meanwhile, the number of cases around the world linked to Covid-19 has crossed 2.02 crore and in India, the number of infections topped the 23-lakh mark.
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