Indian stocks dropped for a third day, with the benchmark gauge falling to a 13-month low, as industrials and lenders retreated amid losses in emerging-market equities.
Mahindra & Mahindra Ltd., the nation’s largest tractor producer, fell to a six-month low, and Bharat Heavy Electricals Ltd., a power-equipment maker, was the worst performer on the S&P BSE Sensex. State Bank of India decreased to a 17-month low and Housing Development Finance Corp. capped a three-day, 6.6 percent loss. A gauge of state-owned companies retreated to the lowest level since May 2014.
The Sensex lost 1 percent to 25,453.56, the lowest close since August 2014. The gauge in August posted its steepest monthly retreat since November 2011 as global funds pulled $2.6 billion from local shares, the biggest withdrawal since October 2008, as concerns about China’s slowdown curbed appetite for riskier assets.
Data Monday showing India’s growth slowed more than estimated added to the pessimism. CLSA Asia-Pacific Markets and Macquarie Capital Securities India Pvt. cut their year-end targets for the gauge by 6 percent and 9 percent on worsening global growth outlook.
“Selling by global investors and selling in bank shares weakened sentiments,” Sanjiv Bhasin, executive vice president at India Infoline Ltd., said in a phone interview from New Delhi. “We expect markets to consolidate around current levels instead of falling more.”
The Sensex earlier rose as much as 1 percent after the government said it will exempt overseas funds from a tax on profits earned before April. Global funds won’t have to pay a so-called minimum alternative tax on profits earned before April 2015, Finance Minister Arun Jaitley said Tuesday, seeking to draw a line under a snafu that had contributed to selling of local stocks.
The gauge trades at 14.4 times projected 12-month profits, the cheapest since Prime Minister Narendra Modi’s government came to power in May last year. That compares with a multiple of 10.5 for the MSCI Emerging Markets Index.
Global funds sold a net $103 million of shares on Sept. 1, paring this year’s inflows to $4.4 billion.