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Bloomberg
Indian stocks declined for a third day in holiday-thinned trading as the threat of slower global growth and its impact on corporate earnings added to uncertainty at the end of a tough year.
The S&P BSE Sensex dropped 0.8 percent to 35,470.15 in Mumbai, with bulk of the losses coming in the last hour of the session. Volumes were about 40 percent below than
the 30-day average. The NSE Nifty 50 Index also retreated 0.8 percent.
Markets globally were roiled last week as renewed US-China tensions and concern about a partial US government shutdown added to negative narratives in the wake of the Federal Reserve’s pledge to continue reversing stimulus of the past decade. At risk in India is a strengthening earnings picture that has seen profits for 50 Nifty companies grow in six of the past eight quarters, according to Bloomberg data.
Earnings at the Nifty companies are estimated to rise an average 19 percent this fiscal year that started on April 1, and 22 percent next year. That compares with a 16 percent growth in the last year, according to Bloomberg data.
“We see potential risks from a global slowdown and China-US trade issues, oil prices and national elections,†Kotak Securities Ltd. analysts led by Sanjeev Prasad wrote in an investor note. “We are neutral on stocks at these levels as a slowdown in world economy can impact EMs and bring more volatility,†said Anu Jain, partner at IIFL Investment Managers.
“Elections in India are the biggest hangover on the markets and the US-China trade war is a key global issue to impact equities.†“It’s a period of accumulation for investors with key risks being global liquidity tightening and trade wars,†said Viral Berawala, chief investment officer at Mumbai-based Essel Finance AMC Ltd.
Sixteen of the 19 sector gauges compiled by BSE Ltd. fell, led by a gauge of property developers. An index of software exporters rose the most. Two-wheeler maker Hero MotoCorp Ltd. fell the most among Sensex members, dropping 4.7 percent, after its shares were downgraded to sell at Goldman Sachs.