Indian stocks fell for a seventh day as a trading halt at the nation’s biggest exchange for spot commodities spurred concern that some investors may sell equities holdings to meet margin calls.
Financial Technologies (India) Ltd. sank 65 percent after its unit National Spot Exchange Ltd. suspended trading in some contracts, merged the delivery and settlement of all others and deferred them for a period of 15 days. Multi Commodity Exchange of India Ltd., 26 percent owned by Financial Technologies, fell by the 20 percent limit. Hindustan Unilever Ltd. advanced 3.7 percent, halting a six-day, 15 percent decline.
The S&P BSE Sensex Index lost 0.2 percent to 19,317.19 at the close in Mumbai, erasing an intraday gain of 1.2 percent. The gauge briefly fell 0.9 percent in a “knee-jerk reaction” to the suspension at National Spot Exchange, said Megha Vazkar, the head of institutional dealing at Maximus Securities Ltd. The Sensex slid for six days through yesterday amid concern capital outflows will accelerate as the rupee weakens.
“In a nervous market even an iota of bad news has a big impact,” Jagannadham Thunuguntla, the chief strategist at New Delhi-based SMC Global Securities Ltd., said by phone today. “The markets were already nervous. The news about the National Spot Exchange definitely impacted sentiments and mood.”
Financial Technologies plunged by record to 191.65 rupees, its lowest price since January 2005. MCX fell to 510.55 rupees, the lowest since the stock’s debut in March last year.
Hindustan Unilever jumped 3.7 percent to 635.2 rupees, the second-best performer on the Sensex. HDFC Bank Ltd. climbed 3.7 percent to 632.2 rupees, ending a six-day, 11 percent decline. Housing Development Finance Corp. rose 2 percent to 817 rupees.
Goldman Sachs Group Inc. cut its rating on Indian stocks to underweight in a report dated July 31, citing a delayed recovery in growth and “rising vulnerability” of the nation’s economy. Goldman recommended investors buy “export-facing” stocks that stand to benefit from better external growth and a weaker rupee, and sell interest-rate sensitive shares.
“The investment case for India has turned less favorable,” Goldman analysts led by Sunil Koul wrote. “We see increasing risks of a potential ‘flow reversal’ in equities, particularly in ‘crowded’ financials.”
Overseas funds sold a net $2.8 billion of Indian stocks in the two months through July 30, the most since the financial crisis in November 2008, data compiled by Bloomberg show. That has pared this year’s net investment to $12.3 billion, still the second-highest inflow in Asia after Japan, the data show.
Reliance Communications Ltd. tumbled 6 percent to 131.30 rupees, after surging 10 percent yesterday. The mobile services company announced a profit of 1.08 billion rupees for the three months ended June, missing the 1.49 billion rupees estimate of 18 analysts in a Bloomberg News survey. Earnings were announced after the market closed.
Five of the 15 Sensex members that have posted earnings so far for the June quarter missed analyst estimates. About 27 percent of companies in the gauge missed forecasts for the three months ended March, and 43 percent in the December quarter, data compiled by Bloomberg show.
The Sensex trades at 13.6 times projected 12-month earnings, down from a 17-month high of 14.3 times on July 23. The MSCI Emerging Markets Index trades at 10 times.