India’s Sensex Drops to Three-Week Low as Banks Fall With MetalsSantanu Chakraborty and Rajhkumar K Shaaw
India’s benchmark stock-index dropped to a three-week low, as a drop in banks and metal shares outweighed a rebound in energy companies.
ICICI Bank Ltd., the biggest private lender, fell for a second day from a record high. Tata Steel Ltd. dragged a gauge of metal shares to a three-week low. Reliance Industries Ltd., owner of the world’s largest refining complex, helped an index of energy shares rebound from its biggest slump in 16 months.
The S&P BSE Sensex slid 0.3 percent to 26,908.82 at the close. The gauge is on course for a second monthly loss after tumbling to its lowest level since September 2013 yesterday, as oil’s rout fueled concern the global economy will slow. Foreign funds have pulled $31.2 million from local shares so far this month, data compiled by Bloomberg show.
“Foreigners are pressing the sell button,” Hemant Thukral, the Mumbai-based head of derivatives at Aditya Birla Money Ltd., said in an interview with Bloomberg TV India today. “We will have to live with a volatile trading environment for the next 5 to 10 trading sessions.”
The CNX Nifty Index on the National Stock Exchange of India Ltd. slid 0.3 percent after sinking 3 percent yesterday. The India VIX Index, a gauge of protection against stock market swings using options, jumped 4.1 percent, adding to a 23 percent surge a day earlier.
ICICI Bank tumbled 2.7 percent to its lowest level since Dec. 17. Bharat Heavy Electricals Ltd., the biggest producer of power equipments, declined 2.7 percent, paring last year’s 50 percent rally. Aluminum maker Hindalco Industries Ltd. plunged 2.9 percent, the worst performer on the Sensex. Tata Steel fell 1.9 percent to its lowest level since March 28. The S&P BSE Metal Index dropped 1.4 percent.
Reliance Industries rose 2.2 percent, ending a four-day, 6.2 percent loss. Oil & Natural Gas Corp., the largest state explorer, added 1.5 percent after tumbling to a eight-month low yesterday. The S&P BSE Oil & Gas Index climbed 1.4 percent.
The biggest collapse in crude prices since the 2008 global recession is “God’s gift” to India and its benefits will flow in the next three months, Rakesh Jhunjhunwala, who owns more than $1 billion of stakes in Indian companies including Lupin Ltd., said in an interview with Bloomberg TV India today.
Yesterday’s selloff was led by global factors and is not a cause for worry, he said. Plummeting commodity prices will keep inflation within 5 percent, below the central bank’s 6 percent target for January 2016, Jhunjhunwala said.
The Reserve Bank of India may cut the main rate by 100 basis points over the next two or three meetings, he said. The bank has left rates steady at 8 percent since January 2014.
Jhunjhunwala said he’s seeing some of the best investment opportunities in mortgage lenders and automakers. Dewan Housing Finance Corp., in which he held a 3.89 percent stake as on Sept. 30, jumped 2.4 percent.
The Sensex is valued at 14.8 times projected 12-month earnings, compared with the MSCI Emerging Markets Index’s multiple of 10.9. Foreigners sold a net $242 million of local shares on Jan. 6.