Sensex falls for 3rd session on growing economy fears

SENSEX-JINDAL-STEEL-LARSEN-TOUBRO:Sensex falls for 3rd session on growing economy fears

mumbai  08 28, 2012, 18:00 IST

 

The BSE Sensex fell on Tuesday for a third straight session, as banks were again hit by continued talk that quarterly growth data would come below expectations, while metal stocks such as Jindal Steel extended a slump on concerns about slowing demand.

Shares are slowly retreating from stronger gains earlier this month as a gridlock in parliament over controversial coal concessions given to private companies threatens to delay policy reforms despite clear signs of slowing growth.

India's economy is expected to have grown 5.3 percent in the April-June quarter, according to a Reuters poll of 38 economists, unchanged from January-March and the slowest growth rate since the same quarter in 2003.

 

However, markets have been hit by persistent speculation growth could fall below 5 percent, and worries are growing the Reserve Bank of India may be unwilling to cut interest rates even at that much lower growth rate.

"Absolutely nothing is happening on policy front in India. In anticipation of reforms process, the market has built in some momentum in the last 1-2 months," said Jagannadham Thunuguntla, head of research at SMC Investments and Advisors Ltd

"Now only that can change the equation is any quantitative easing from the U.S."

"From India everything will be disappointing," he said referring to the GDP data.

The BSE Sensex fell 0.27 percent to 17,631.71, marking its third losing session, though it still held on to a 2.3 percent gain for the month.

The Nifty declined 0.29 percent to 5,334.60.

BNP Paribas downgraded Indian stocks to "neutral" from "overweight", saying policy reforms may be delayed until after general elections in 2014 due to a deadlocked government and high inflation.

A NSE sub-index of banks fell 0.9 percent, bringing its losses over the past four sessions to 3.92 percent.

ICICI Bank shares fell 1.4 percent, while HDFC Bank declined 0.8 percent.

India's NSE metals sub-index slumped 2.8 percent, bringing its falls over the past three sessions to 4.2 percent, on growing worries that slowing demand from China and other key markets would lead to continued discounting in the sector.

JSW Steel fell 1.6 percent, while Tata Steel lost 1.9 percent.

India's largest aluminum producer Hindalco Industries dropped 3.1 percent, while non-ferrous metals and mining company Sterlite Industries fell 5.4 percent.

Shares in Jindal Steel and Power ended down 4.9 percent, hitting earlier its lowest since May 28, 2009, after already slumping 7.4 percent in the previous two sessions.

Jindal share falls also reflected continued worries about the impact over the recent report from the country's Comptroller and Auditor General (CAG) on the government's coal concessions.

Wockhardt dropped 7.4 percent after being included by the Bombay Stock Exchange (BSE) among the 74 stocks which must now be settled on a trade-to-trade basis, forcing buyers and sellers to square the trade after each transaction.

However, among gainers, Tata Consultancy Services gained 1.93 percent, hitting a record high, after Bank of America-Merrill Lynch said the software services exporter is gaining market share across its segments after meeting with management.

Sun Pharma shares added 1.7 percent after its U.S. unit Caraco received U.S. FDA clearance to resume operations according to an exchange disclosure.

($1 = 55.6750 rupees)

(Editing by Rafael Nam)