Indian Stocks Drop for Third Day as Industrials Fall Amid Expiry

  • Volatility to rise before RBI review next week: Peerless
  • Sensex poised for first quarterly advance since March 2015

Indian stocks reversed gains, with benchmark gauges falling to one-month lows, as lenders and industrials fell before the expiry of monthly derivatives contracts and as global equities erased an earlier advance.

The S&P BSE Sensex and the NSE Nifty 50 gave up intraday gains of 0.5 percent in the last hour of trade when European markets opened. The MSCI All-Country World Index erased a rally fueled by Hillary Clinton’s performance in the first American presidential debate, weighed down by the prospect of U.S. fines for Volkswagen AG and Deutsche Bank AG.

IndexChangeSize and scope
S&P BSE Sensex-0.3%Third day of decline
Nifty 50-0.2%One-month low
S&P BSE MidCap+0.1%13,275.62
S&P BSE SmallCap+0.1%Touched record intraday

“Foreign investors are turning cautious as European banks and U.S. elections keep markets on tenterhooks," Jitendra Panda, chief executive officer at Peerless Securities Ltd., said by phone from Kolkata. “Volatility is expected to rise before the monthly expiry, the Reserve Bank of India meeting next week and the start of the earnings season in October. We’re seeing risk-off trade returning.”

Overseas investors sold about $60 million of shares in the past two sessions, paring this month’s inflow to $649 million, which is still the highest in Asia after South Korea, data compiled by Bloomberg show. Foreigners have been net buyers of local shares for seven months, the fastest pace since November 2014. The inflows have put Indian equities on course for their first quarterly climb since March 2015.

Financial markets judged the first American presidential debate that took place yesterday in favor of Democrat Hillary Clinton. An election victory for Republican candidate Donald Trump may hurt bonds in emerging markets by weighing on global trade, according to Aberdeen Asset Management Asia Ltd. The outcome of the elections won’t “materially impact” the Indian markets, according to K.R. Choksey Shares & Securities.

“We will watch the elections keenly but capital flows to our markets are not significant,” said Deven Choksey, managing director of the Mumbai-based brokerage.

India’s stock market is the world’s ninth-biggest with a value of $1.7 trillion. Global funds have bought $6.8 billion of local shares this year, less than the $9.5 billion they’ve plowed into South Korean equities and $14 billion in Taiwanese shares in the period, data compiled by Bloomberg show.

  • Tata Consultancy Services Ltd., the largest software services exporter, and Lupin Ltd. were among the top gainers on the Sensex. 

  • Multi Commodity Exchange of India Ltd. jumped 7.5 percent, the most since February 2015, after CNBC television channel reported that the exchange has increased non-agri commodities transaction charges by 25 percent.

  • Larsen & Toubro Ltd., the largest engineering company, lost 2 percent in a third day of declines, while Adani Ports & Special Economic Zone Ltd. was the worst performer on the Sensex. Bharti Airtel Ltd. decreased to a three-week low.

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