Indian (SENSEX) stocks dropped the most in a week, led by lenders and energy companies, as the political impasse over the U.S. debt limit and government shutdown weighed on investor sentiment.
ICICI Bank Ltd. (ICICIBC) fell for a second day, sending a gauge of lenders down 2.5 percent. Reliance Industries Ltd. (RIL), owner of the world’s largest refining complex, fell 1.7 percent, the worst performer on the S&P BSE Oil & Gas Index. Coal India Ltd., the largest producer of the fuel, slid 3.3 percent.
The S&P BSE Sensex slid 0.9 percent to 19,731.88 at 12:10 p.m. in Mumbai amid volume that was 31 percent below the 30-day average for this time of day. Asian shares fell as U.S. House of Representatives Speaker John Boehner said lawmakers won’t lift the debt limit without packaging it with other provisions, a nonstarter for President Barack Obama. The U.S. took in about 13 percent of India’s exports in June. Infosys Ltd. (INFO), India’s second-largest software exporter, is the first Sensex company due to post quarterly earnings on Oct. 11.
“The uncertainty in the U.S. is hurting local sentiment and investors are also booking profit ahead of the quarterly earnings season,” Alex Mathews, head of research at Geojit BNP Paribas Financial Services Ltd. (GBNP), said by phone from Kollam in southern India.
ICICI Bank tumbled 3.5 percent to 897.85 rupees, bound for the lowest level since Sept. 30. State Bank of India slid 1.3 percent to 1,629.75 rupees. HDFC Bank Ltd. (HDFCB), the biggest lender by market value, slumped 2.9 percent to 622.55 rupees.
Reliance lost 1.7 percent to 839.5 rupees, the most since Sept. 30. Oil & Natural Gas Corp. (ONGC) fell for a second day, losing 0.9 percent. Coal India fell for first time in four days. The S&P BSE Oil & Gas Index lost 1.2 percent.
Obama’s administration has said it won’t negotiate with Republicans over funding the government or raising the debt ceiling, arguing that it is part of the basic functions of Congress and shouldn’t be used as point of leverage. Obama, in an interview with the Associated Press, said he expects Congress will reach an agreement to raise the nation’s $16.7 trillion debt limit in time to avert a default.
The Sensex has climbed 1.5 percent this year and is valued at 13.6 times estimated earnings for the next 12 months, compared with the five-year average of 14.1 times. The MSCI Emerging Markets Index has a multiple of 10.5.
The CNX Nifty index on the National Stock Exchange of India Ltd. slipped 0.9 percent to 5,853.95. The India VIX Index advanced 5.4 percent.
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