India Sensex Drops a Third Day Amid Derivatives Expiry

India’s benchmark stock index dropped for a third day, reaching a fresh one-month low, amid weakness in consumer shares and energy producers ahead of the derivatives expiry on Thursday.

The S&P BSE Sensex fell 0.4 percent to close at 30,834.32 in Mumbai, a fifth decline in the past six sessions. Consumer durables was the biggest sector decliner among the 13 subindexes. Asian Paints Ltd. fell 2.2 percent amid expectations of higher costs following the implementation of a goods-and-services tax beginning July 1.

The roll cost, or the price traders pay to replace current month futures with July securities, was 39 basis points in Mumbai a day before expiry, compared with the three-month mean of 37 basis points, data compiled by Bloomberg show. The higher cost implies investors are prepared to pay more to buy new contracts on the NSE Nifty 50, underpinning an index which has reached record highs several times this year. The Nifty fell 0.2 percent.

“The derivatives expiry is keeping markets choppy,” Soumen Chatterjee, head of research at Guiness Securities Ltd., said by phone. “We are advising clients to buy on dips. Large cap stocks look better as mid caps are likely to remain under pressure due to deleveraging.”

Summary

  • Jaypee Infratech jumps 11.4% amid report lenders to invoke bankruptcy
  • Maruti Suzuki up 0.6% as Nomura raises PT by 19%
(Corrects to remove Wipro as decliner and to use settled prices for Jaypee, Maruti.)
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