India's Sensex Declines a Third Day as Mahindra Shares Pace Fall

Updated on
  • Benchmark gauge is headed for worst month since February 2016
  • The NSE Nifty 50 Index closes below its 100-day moving average

Indian shares declined, with the benchmark gauges extending their retreat to a third straight day. The equity indexes erased the gains they held through the day in the last half an hour.

The benchmark S&P BSE Sensex dropped 0.2 percent at the close in Mumbai, taking its February slide to 6.3 percent, putting it on course for the worst monthly performance in two years. Mahindra & Mahindra Ltd.’s 2.2 percent fall was the steepest among Sensex members after the car-and-tractor maker said Monday it will invest an additional 5 billion rupees ($77 million) on electric vehicles.

Sentiment toward Indian stocks soured this month as investors assess the impact of a long-term capital gains tax on equities along with a decision by Indian exchanges to end licensing accords with counterparts abroad, and an almost $2 billion bank fraud engulfing state-owned lenders.

“Higher valuations are a challenge and rising volatility can be worrisome if there’s a downward bias in the market,” said Sampath Reddy, chief investment officer at Pune-based Bajaj Allianz Life Insurance Co. “Factors such as the impact of tax on equities, the dispute with SGX and MSCI, bad-loan problems of banks are weighing on investor minds and leading toward negative sentiment,” he said.

The NSE Nifty 50 Index dropped 0.2 percent -- closing a second straight session below its 100-day moving average -- a trend line that has supported its rally for more than a year. The last time it fell below the mean was in November 2016, when it went on to decline more than 7 percent.

(Closes prices, updates throughout.)
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