Sell-off roils India stocks on growth concerns

MUMBAI • A global stocks sell-off that started in the US last Friday has extended to Indian equities. US futures signalled further declines after a range of economic data dimmed the outlook for global growth.

The S&P BSE Sensex fell 0.9% to 37,819.90 as of 10:13am in Mumbai yesterday, declining for a second session even after it capped five straight weeks of gains through last Friday. The NSE Nifty 50 Index also dropped 0.9%.

India’s equity market has been in ‘Overbought’ territory for the past eight days, signalling gains might have come too quickly to hold. A surge in foreign flows led to a recent rebound in local equities on bets of a revival in company earnings, low interest rates and an increasing chance of another five-year term for Prime Minister Narendra Modi in a national poll scheduled through May.

“It makes sense not to take any aggressive bets currently as the situation is still uncertain and it’s better not to deviate portfolios much from their benchmarks,” said Hemant Kanawala, equities head at Kotak Mahindra Life Insurance Co Ltd in Mumbai.

Sixteen of the 19 sector indexes compiled by BSE Ltd dropped, led by a gauge of metal stocks. Six of those indexes fell more than 1%. Moreover, 26 of the 31 Sensex members and 41 of the 50 Nifty stocks retreated.

Both the Sensex and Nifty had held above the 14-day Relative Strength Index level of 70 for eight days, a signal to some traders that they were overbought. Aluminium producer Hindalco Industries Ltd’s 2.7% drop, its first in five days, was the steepest among Nifty members.

State-owned refiner Indian Oil Corp gained 2.8% as Brent crude futures dropped for a third day to its lowest price in more than two weeks.

Karnataka Bank Ltd dropped 2.9%, the most in a month, after reporting a fraud totaling 132.6 million rupees (RM7.73 million).

Consumer goods maker TTK Prestige Ltd climbed 3.8% as its board will meet on March 29 to consider a free-share issue. Guar gum polymer maker Vikas WSP Ltd rose 5.8% after winning about 1.8 billion-rupee of orders. — Bloomberg