Indian Stocks Drop for Second Day Before Budget, Asian Selloff

Updated on
  • February derivatives' expiry, railway budget due on Thursday
  • Finance minister Jaitley to present federal budget on Monday

Indian stocks tumbled for a second day as investors refrained from taking new bets before next week’s federal budget and as losses in Asian equities deepened.

NTPC Ltd. fell for a third day after the government sold shares in the top power producer at a discount. Bharat Heavy Electricals Ltd., the biggest power-equipment maker, plunged to a 10-year low. HDFC Bank Ltd. is heading for its worst monthly loss in four years. ITC Ltd., India’s biggest cigarette company, fell to a 30-month low.

The S&P BSE Sensex plunged 1.4 percent to 23,088.93 at the close in Mumbai. Investors are looking ahead to key events over the next few days, including Finance Minister Arun Jaitley’s budget for the financial year starting April 1 on Monday. Appetite for equities continued to sour in Asia as oil’s drop and a revival in demand for low-risk assets saw stocks from Japan to Australia decline with emerging-market currencies.

“The budget impact will last a few days, after which we will start talking about global cues, corporate earnings and fundamentals,” Daljeet Singh Kohli, head of research at India Nivesh Securities Pvt., said in an interview with Bloomberg TV India. “Unfortunately, there’s no positive news on any of those."

Global Turmoil

Oil’s retreat is weighing on global stocks along with concerns about growth in China, the world’s second-biggest economy. A gauge of expected volatility in American equities rose for the first time in seven sessions as the swing back to losses reminded investors of the sense of uncertainty that has persisted in global markets since the start of the year. The risk that U.K. citizens will vote to leave the European Union in June is weighing on the British currency.

Overseas investors bought a net $118.2 million of Indian stocks on Tuesday, paring this year’s outflow to $2.3 billion. Still, they have been net sellers on all but one of the past 15 days, data compiled by Bloomberg show.

The government will also unveil the railway budget on Thursday and the economic survey, a summary of the various policy initiatives over the last year, on Friday. The expiry of monthly derivative contracts, which is often preceded by an increase in volatility, is also due Thursday.

Bharat Heavy Electricals tumbled 5.1 percent, extending this year’s loss to 45 percent. HDFC Bank retreated 2.1 percent. The stock has dropped 9.6 percent in February, heading for its worst month since November 2011.

Banks Drop

ICICI Bank Ltd. decreased 2.6 percent to its lowest level since February 2014. State Bank of India lost 1.4 percent, extending this year’s decline to 30 percent.

ITC slid 2.1 percent, taking this month’s decline to 10 percent, set for its worst since the period October 2008. Tata Motors Ltd., owner of Jaguar Land Rover, decreased the most since Feb. 16. Oil & Natural Gas Corp., the largest state-owned explorer, slid 2.4 percent, ending a five-day, 7.3 percent advance.

Sugar mills’ shares bucked the downtrend in the broader market after global raw-sugar prices surged the most in at least 22 years on Tuesday. Balrampur Chini Mill Ltd. and Bajaj Hindusthan Sugar Ltd. both climbed the most in a week. EID Parry Ltd. added 1.7 percent. Prices rose after the International Sugar Organization increased its forecast for a output deficit in the current crop year on rising concern about the impact of the El Nino weather pattern on supplies.