India Stocks Tumble to Three-Month Low With Rupee as ONGC Slides

  • Weaker rupee damps `positivity' from drop in oil: Geojit BNP
  • Congress disrupts parliament over summons to Sonia, Rahul

India’s benchmark stock index tumbled to a three-month low and the rupee weakened for a fifth day as investors weighed the benefits of lower energy prices against declines in global equities.

Vedanta Ltd. and Hindalco Industries Ltd., the country’s biggest copper and aluminum producers, were among the worst performers on the S&P BSE Sensex index. Oil & Natural Gas Corp., the largest explorer, slid to its lowest price since May 2009 as crude traded near a six-year low. GAIL India Ltd., the top gas-marketing company, tumbled the most on the index. Coal India Ltd. fell to a two-month low.

The Sensex lost 0.9 percent to 25,310.33 at the close in Mumbai. Asian stocks dropped 1.3 percent after China’s exports declined for a fifth month, while oil slid amid speculation a global glut will persist with the OPEC having abandoned its strategy of limiting output. A weak rupee raises the cost of imports for India, which buys about 80 percent of its oil from overseas.

“Lower oil prices benefit us but a weaker currency dampens that positivity,” Gaurang Shah, vice president at Geojit BNP Paribas Financial Services Ltd. in Mumbai, said in an interview with Bloomberg TV India. Shah said he’s bullish on companies that gain from lower oil costs, including paint and tiremakers.

Parliament Disruptions

The market is also monitoring the goods-and-services bill, which has been repeatedly blocked by Prime Minister Narendra Modi’s opponents, Shah said. The unified sales tax is one of India’s biggest economic reforms since the early 1990s.

Parliament was disrupted Tuesday after main opposition Congress party members stalled proceedings. The protests came a day after the Delhi High Court, in a blow to the main Congress party leaders Sonia and Rahul Gandhi, declined to give them any relief in the National Herald case, asking them to appear before the trial court. They will appear in court on Dec. 19, lawyer Abhishek Singhvi told reporters in New Delhi.

Modi needs to win over the Congress party to push through the GST bill. While Modi met Sonia Gandhi last month to discuss a compromise, the recent development may make it difficult for government to reach any compromise on the measure.

“I have my doubts if the GST bill will be passed in this session, going by our history of parliamentary disruptions,” Chokkalingam G., managing director at Equinomics Research Pvt., said in an interview to Bloomberg TV India. “Sadly, we will have to live with that disappointment.”

‘Deflationary Pressure’

China’s imports fell for a record 13th straight month, albeit at a slower-than-estimated pace. The drop is a drag on other economies as the nation’s flagging industrial plants need less raw materials while robust consumer demand hasn’t picked up fast enough to offset those declines. Oil has plunged about 40 percent in the past year while iron ore trades at a record low.

“The crash in crude oil and iron ore prices shows an increase in deflationary pressures globally and that’s more worrying than India’s macroeconomic fundamentals, which are improving,” Chokkalingam said. “An increase in rates by the Fed will give some comfort to the Indian market as it would help ease the deflationary pressure globally.”

The rupee dropped 0.2 percent to 66.84 a dollar. The currency, which fell 2.1 percent last month in Asia’s worst performance, is set for the longest run of declines since August.

Vedanta plunged 4.5 percent, extending the year’s loss to 59 percent. Hindalco tumbled 4.1 percent, the most since Nov. 18. Oil & Natural Gas slid 3.6 percent to its lowest price since May 2009. GAIL India tumbled the most since Aug. 24. Coal India lost 2.9 percent.

The Sensex has fallen 8 percent this year and trades at 14.9 times projected 12-month earnings, the least expensive in two months. The MSCI Emerging Markets Index has lost 17 percent and is valued at a multiple of 11.

Overseas investors sold a net $6.3 million of Indian stocks on Dec. 7, paring this year’s inflows to $2.9 billion. They sold $1.1 billion last month.

Before it's here, it's on the Bloomberg Terminal.