Sensex extends losing streak to 9 days

MUMBAI • Indian equities declined over concerns that India may escalate its response to a deadly attack on its armed forces last week, while uncertainty about the outcome of the national elections also weighed on sentiment. The key gauges reversed an earlier advance in the last hour of trade, while indexes tracking mid-and small-cap shares held on to their gains.

The benchmark S&P BSE Sensex dropped 0.4% to 35,352.61 at the 3:30pm close in Mumbai yesterday, extending its decline to a ninth day, its worst run since May 2011. The NSE Nifty 50 Index retreated 0.3%. Both gauges reversed a gain of as much as 0.8%.

Even as outlook on India’s economy and corporate earnings remains buoyant, uncertainty about the outcome of national polls in May weighs down sentiments as Prime Minister Narendra Modi’s re-election bid has turned out to be tougher than earlier estimated. Investors also assess the cost and scope of the nation’s retaliation to an attack on its security forces.

“There’s no conviction to invest and this is amply indicated by today’s market move,” said Sushant Kumar, fund manager for equity at Raay Global Investments Pte Ltd. “Markets hate uncertainty and there is plenty of that currently regarding the election outcome and India’s friction with Pakistan.

“There are no reasons for the markets to rise as no one knows the outcome of the national polls, leading to uncertainty about what the next government will be,” Andrew Holland, CEO at Avendus Capital Ltd in Mumbai, said.

”There are still lingering worries over the property and the non-bank finance businesses, which aren’t going away; cross-border escalation is adding to the already existing volatility,” he said.

“We expect the markets to be rangebound till election results; mid-sized stocks look attractive now and over-valuation is no longer a concern after the steep fall they have been through,” said Sampath Reddy, CIO at Bajaj Allianz Life Insurance Co Ltd in Pune. — Bloomberg