Indian stocks fell the most since July, with the benchmark index erasing the year’s advance, as global equities slid amid concern the Federal Reserve may scale back U.S. economic stimulus and China called for property curbs.
The S&P BSE Sensex index slumped 1.6 percent to 19,325.36, the most since July 23. Reliance Industries Ltd., owner of the world’s largest refining complex, lost 1.8 percent. Metalmakers Jindal Steel & Power Ltd., Tata Steel Ltd., Sterlite Industries (India) Ltd. and Hindalco Industries Ltd. were among the worst performers on the gauge.
The MSCI All-Country World Index of stocks lost 1 percent at 9:45 a.m. in London and the Standard & Poor’s GSCI Index of 24 raw materials slid to a one-month low after China called for property curbs and as Federal Reserve minutes showed divisions over monetary stimulus. A global “risk-off” may reverse the record foreign fund flows into Indian equities, Morgan Stanley said in a report dated yesterday.
“Overseas exchange-traded funds are selling commodities, leading to a collateral damage for emerging markets equities, including India,” Deven Choksey, managing director at K.R. Choksey Shares & Securities Pvt. in Mumbai, said by telephone. “FII flows are linked with the U.S. stimulus. A withdrawal may cause the flows to slow.”
Overseas funds, who net sold local equities for the first time this year on Feb. 19, have bought a total of $8 billion of stocks this year, a record for the period, data compiled by Bloomberg show. They bought a net $24.5 billion in 2012, the most among 10 Asian markets tracked by Bloomberg. The Sensex had its biggest annual gain in three years last year.
Foreign buying during the past 12 months as percentage of India’s stock market value has crossed 2 percent, a “warning sign” historically, Morgan Stanley said. Credit Suisse Group AG said Feb. 4 Indian equities were the “most overbought” by foreigners at 1.7 percent of the market capitalization.
ICICI Bank Ltd., the third-biggest lender by value, sank 3.7 percent to 1,079.60 rupees, the lowest price since Nov. 27. Reliance, the second-biggest company in the Sensex, lost 1.8 percent to 859.2 rupees.
Tata Steel and Jindal Steel & Power slumped 4 percent each to 363.9 rupees and 355.3 rupees. Aluminum maker Hindalco slid 3.4 percent to 107.8 rupees. The S&P BSE Metal index sank 3.2 percent, the most among the 13 BSE sectoral indexes.
Larsen & Toubro Ltd., the nation’s biggest engineering company, dropped 2.2 percent to 1,425.85 rupees, the lowest close since Sept. 13. ITC Ltd., the biggest cigarette maker, lost 1.1 percent to 296.60 rupees, the lowest since Jan. 23.
Maruti Suzuki India Ltd. dropped 2.7 percent to 1,467.5 rupees while Hero MotoCorp Ltd. dropped 0.4 percent to 1,688.4 rupees. The companies closed factories as workers continued a strike against government’s economic reforms for a second day.
The Sensex has lost 3.9 percent from a two-year high set on Jan. 25 as profits at 43 percent of its 30 members trailed estimates in the three months ended Dec. 31, compared with 40 percent in the previous two quarters, Bloomberg data show.
“Earnings were a non-event as margin performance was a bit disappointing,” Brahmaprakash Singh, chief investment officer of equity at Pramerica Asset Managers, told Bloomberg TV India. “The capital-intensive sector disappointed more and top-lines of companies that reported good numbers were under pressure.”
The Sensex trades at 13.7 times projected 12-month profits, data compiled by Bloomberg show. That compares with the MSCI Emerging Markets Index’s 10.2 times.
The CNX Nifty Index of the National Stock Exchange dropped 1.5 percent to 5,852.25, the most since July 23.