Indian stocks tumbled on Friday, with the benchmark Sensex posting its steepest weekly loss in nearly four years, as investors await Friday’s US payrolls data.
Axis Bank and ICICI Bank retreated at least 3.4% to pace losses for the financial sector. Vedanta, the largest copper producer, slid 5.1%. Tata Steel, the biggest producer of the alloy, and Tata Motors slumped the most in a week.
The S&P BSE Sensex fell 2.2% to 25,201.90, capping its lowest close since July 2014. It slumped 4.5% this week, the most since November 2011.
The August non-farm payrolls report may add fuel to the debate over whether the US economy is strong enough for the Federal Reserve’s first interest-rate increase since 2006. Overseas investors sold a net $231 million of Indian stocks on September 2, paring this year’s inflows to $4.1 billion.
“Global investors are facing redemption pressure in a risk- off environment,” Jitendra Panda, chief executive officer at Peerless Securities said. “Everyone is watching everything in all this turmoil. We expect volatility to continue.”
India’s gross domestic product increased by a less-than-expected 7% in the April-to-June period, slowing from a 7.5% expansion in the previous quarter.
The Sensex has fallen 8.4% this year and trades at 14.3 times projected 12-month earnings. The MSCI Emerging Markets Index is valued at a multiple of 10.4.
Investor wealth slumped by R1.92 lakh crore on Friday owing to Sensex’s 563-point fall. Following the sharp decline in stocks, the market capitalisation of BSE-listed companies fell by R1,92,604.36 crore to R93,83,643 crore.
“Indian indices remained under pressure primarily on account of the sustained global risk-off trend, which has had its impact on stock markets across the world.
“Concerns with respect to the Chinese economy slowdown and its impact on global growth, the consequent currency volatility, and the stance that the US Fed would adopt in its policy meet a couple of weeks from now, continued to affect investor sentiments,” said Hitesh Agrawal – head research, Reliance Securities.