Indian stocks declined, with the benchmark index ending four days of gain, as global equities fell amid concerns of more U.S. stimulus cuts and after data showed Chinese manufacturing shrank in February.
State Bank of India fell the most a week, with a gauge of lenders ending a four-day, 4.6 percent climb. Tata Steel Ltd. slid to a two-week low, leading declines on the S&P BSE India Metal Index. Mahindra & Mahindra Ltd., India’s largest maker of sport-utility vehicles and tractors, lost 1.4 percent.
The S&P BSE Sensex tumbled 0.9 percent to 20,536.64 at the close, halting a four-day, 2.6 percent advance. The MSCI Asia Pacific Index declined from a one-month high after a Chinese manufacturing gauge fell to a seven-month low and the U.S. Federal Reserve signaled cuts in stimulus will likely continue.
“A decline was very much on the cards” after the recent rally, P. Phani Sekhar, a fund manager at Angel Broking Ltd., said in an interview today. “The Fed signaling that it is on course for more tightening caused jitters.”
State Bank lost 1.8 percent, while ICICI Bank Ltd., the country’s second-biggest lender, decreased 2.2 percent, the worst performer on the Sensex. HDFC Bank Ltd., the largest by market value, lost 1.1 percent.
Tata Steel tumbled 1.9 percent to its lowest level since Feb. 6. Steel Authority of India lost 2.3 percent. Aluminum maker Hindalco Industries Ltd. slid 1.5 percent. The BSE Metal index tumbled to its lowest level since Feb. 4.
Mahindra & Mahindra dropped 1.4 percent. Oil & Natural Gas Corp. lost 1.2 percent.
The Sensex trades at 13.2 times estimated 12-month profits, compared with the average multiple of 14.4 over the past five years. The MSCI Emerging Markets Index trades at 10.1 times, data compiled by Bloomberg show.
The Sensex had risen every day this week through yesterday after the government pledged to narrow the fiscal deficit to a seven-year low. Finance Minister Palaniappan Chidambaram Feb. 17, while unveiling an interim budget before polls due by May, cut taxes for cars and consumer goods to stoke demand in an economy growing at the slowest pace in a decade.
The gauge has declined 3 percent this year amid concern that the opposition Bharatiya Janata Party’s victories at state elections in December won’t give it enough momentum to secure a parliamentary majority in the polls. Moody’s Investors Service warned last week that any so-called third front government, a grouping of regional parties as an alternative to the ruling Congress and the BJP, could lack a common agenda to revive the economy, pressuring both the rupee and India’s credit rating.
The CNX Nifty Index on the National Stock Exchange of India Ltd. plunged 1 percent to 6,091.45. The India VIX rose 0.5 percent, halting a four-day, 15 percent slide.
Overseas investors bought a net $113.4 million of domestic shares on Feb. 18 and 19, data compiled by Bloomberg show. They bought $20 billion last year, the most in Asia after Japan.