India Stocks Drop to 3-Week Low as ITC Falls Amid Global Selloff

  • Tata Motors, Maruti drag automakers on BS-6 emission norm plan
  • Global investors sell $123 million of shares so far this week

India’s benchmark stock index slid to a three-week low in the final stretch of trading as losses in European equities after China weakened the yuan raised concerns about global growth.

ITC Ltd., the largest tobacco company, was the worst performer on the S&P BSE Sensex, while Hindustan Unilever Ltd. fell to a three-week low. Tata Motors Ltd. paced losses among automakers after the government said it would directly adopt the more stringent BS-6 emission norms starting 2020 from BS-4 at present.

The Sensex dropped 0.7 percent at the close in Mumbai, with bulk of the losses coming after European equities began trading at about 1:30 p.m. local time. The Stoxx Europe 600 Index slid 1.1 percent and futures on the Standard & Poor’s 500 Index lost 1.4 percent. Indian equities tumbled the most in three months on Monday as concern over a slowing Chinese economy and tension in the Middle East spurred a selloff in Asian equities.

“We sold off because of weak European markets,” Jagannadham Thunuguntla, the head of fundamental research at Karvy Stock Broking Hyderabad, said in an interview with Bloomberg TV India on Wednesday. The weakness “is a temporary global phenomenon and it is a good time for investors to start their homework on stock selection,” he said.

TCS Earnings

The Sensex fell last year for the first time since 2011 as global funds sold emerging-market assets and corporate earnings failed to recover. Fifty-seven percent of Sensex companies in the September quarter posted earnings that matched or beat estimates, versus 60 percent in June, data compiled by Bloomberg show.

Tata Consultancy Services Ltd. rebounded from a one-month low before its results on Jan. 12, the first quarterly report from a Sensex company.

“We will see choppiness and low volumes as the earnings season is just around the corner,” Nitasha Shankar, vice president for equity research at Yes Securities Ltd. in Mumbai, said in an interview with Bloomberg TV India. “In the absence of domestic triggers, global events will influence the market.”

Overseas investors sold a net $37 million of Indian stocks on Jan. 5. They bought $3.3 billion of shares last year, the smallest in four years.

The Sensex trades at 15.2 times projected 12-month earnings. The MSCI Emerging Markets Index is valued at a multiple of 10.8.

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