Indian Stocks Retreat Most in Three Months Amid China Selloff

  • China halts trading after 7% slump in worst start to year
  • Tata Motors, Hero MotoCorp retreat as December sales slide

India’s benchmark stock index tumbled the most in more than three months as concern over Chinese data and tension in the Middle East spurred a selloff in Asian equities and currencies.

Bharti Airtel Ltd., Idea Cellular Ltd. and Reliance Communications Ltd. slumped more than 4 percent each after the telecom regulator asked the cell-phone operators to comply with its earlier order to compensate users for call drops. Tata Motors Ltd., the owner of Jaguar Land Rover, was the worst performer on the S&P BSE Sensex. Hero MotoCorp Ltd. slid for a fourth day after posting a drop in December sales.

The Sensex declined 2.1 percent after capping a third weekly gain on Friday. China halted trading after a selloff triggered circuit breakers on the first day they took effect. The rout began after data showed manufacturing weakened for a fifth month. Losses in local stocks deepened after an index showed a contraction in India’s manufacturing for the first time in more than two years.

“China numbers are not looking good and after the good-year end rally that we had, there are no immediate triggers for investors to look forward to," said Alex Mathews, the head of research at Geojit BNP Paribas Financial Services Ltd. in the southern state of Kerala. He’s advising investors to buy shares of road builders.

The Nifty Index tumbled 2.2 percent to 7,791.30. India VIX Index, a gauge of the cost of demand for protection against stock-market swings, surged the most since Aug. 24.

The Sensex slid 5 percent last year, after rising 30 percent in 2014, as euphoria over Prime Minister Narendra Modi’s economic agenda waned and concern grew that tighter U.S. monetary policy will curb the appeal of higher returns offered in emerging markets. Global funds bought $3.3 billion of local shares in 2015, the smallest inflow in four years.

The Nikkei and Markit India Economics Index fell to 49.1 in December, the lowest since August 2013, data showed Monday. A reading above 50 signals expansion while anything below that indicates a contraction. A similar gauge for crucial services growth is due on Wednesday.

The data underscores Modi’s struggle to boost private investment in the face of legislative logjams, choked credit lines and weakened global prospects due to China’s slowdown. State spending has underpinned India’s growth, which the Finance Ministry forecasts at 7 percent to 7.5 percent in the year through March.

Bharti Airtel tumbled the most since Aug. 24. Idea Cellular plunged 5.3 percent, extending last year’s 6.6 percent slide. Reliance Communications slid 6.6 percent after rallying 30 percent in the last quarter.

The Telecom Regulatory Authority of India has asked cell phone operators to pay users for call drops from January 1, even as the companies said they will pay only after a court orders them to do so, the Press Trust of India reported.

Tata Motors plunged 6.2 percent, the most since Aug. 24 after its December sales fell 4 percent from a year earlier. Hero MotoCorp slid 1.8 percent in a fourth day of decline after last month’s dispatches fell 5 percent.

ICICI Bank Ltd. fell 2.8 percent, while State Bank lost 3.1 percent. Housing Development Finance Corp., the biggest mortgage lender, retreated 3.3 percent, the most since Aug. 26.

The Sensex trades at 15.3 times projected 12-month earnings, compared with a multiple of 10.7 for the MSCI Emerging Markets Index.

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