India’s CNX Nifty index futures slumped the most in four months after block deals and foreigners sold the contracts for seven straight days through Tuesday.
Nifty index futures for May delivery lost 2.9 percent to 8,122.50 at the close in Mumbai, its biggest drop since Jan. 6. Losses steepened after 38,899 May contracts were traded at 8,224.85 at 9:40 a.m. in a deal valued at 8 billion rupees ($126 million), according to data compiled by Bloomberg. Two tranches of more than 12,000 contracts were also transacted, data show. The Nifty fell 2.7 percent to 8,097, its lowest this year.
Foreign investors have been net sellers of Nifty index futures since April 23 as stocks retreated amid concern that company earnings growth will slow. Overseas investors also sold a combined $475 million of local shares on Thursday and Monday, extending a series of withdrawals that began April 22, the longest since the 12 days through Dec. 24. They bought $16 billion of stocks last year.
“Today’s deep correction dashes hopes of a near-term rebound,” Nilesh Dedhia, a Mumbai-based director at Vidhi Wealth Management Ltd., which oversees about $236 million in assets, said in a phone interview. “The Nifty has broken its short-term trendline support” at 8,260.
The steeper losses for Nifty futures over the Nifty index have further narrowed the May contract’s average premium over the spot index, indicating investors anticipate smaller future gains. Their ratio fell to 1.0031 on Wednesday, the lowest over the first three days of a current-month contract since August, data compiled by Bloomberg show.
The VIX Index, India’s benchmark gauge of option prices, advanced 13 percent to 19.67, the highest since Feb. 26.