Indian shares fell 4.44 percent on Monday to end the March quarter down 22.9 percent, their biggest quarterly fall since the June 1992 quarter, as surging inflation and signs of an economic slowdown scared off investors.
Monday also marked the end of the 2007/08 fiscal year, and despite the sharp fall in the March quarter the index ended the fiscal year up 19.7 percent due to a strong rally in 2007.
Financial stocks were hit hard, hurt by persistent concerns of a global credit crunch and Friday’s data showing a rise in local inflation to a 14-month high of 6.7 percent in mid-March.
Top private lender ICICI Bank fell 7.8 percent to 770.10 rupees, taking its losses for the quarter to 37.5 percent and contributing most to the fall in the main index.
Top lender State Bank of India fell 4.8 percent to 1,598.85 rupees. The sector index dropped 5.9 percent on the day and 32.4 percent in the quarter.
Top mortgage firm Housing Finance Development Corp ended 8.8 percent lower at 2,383.75 rupees. “Inflation is the biggest problem right now, and with the economy slowing down there will be a pressure on margins of corporates that will lead to an earnings downgrades,” said Nikunj Doshi, investment manager at Envision Capital.
“I think the government is more interested in controlling inflation and would prefer it over arresting a slowing growth,” he said.
The benchmark BSE 30-share index ended 726.85 points at 15,644.44, with 26 components in the red. Its quarterly fall of 22.9 percent was its biggest since a 28.1 percent drop in the June 1992 quarter.
In the broader market 1,364 gainers just beat 1,290 losers on volume of 328 million shares.
The 50-share NSE index lost 4.2 percent to 4,734.50.
The sharp rise in annual inflation from 5 percent at the end of February has prompted markets to expect a policy response form the central bank, such as higher interest rates or increased reserve requirements for banks.
And the worries that financial market problems would knock the U.S economy into recession weighed on outsourcers, who get 60 percent of their revenues in the world’s largest economy.
Tech bellwether Infosys Technologies Ltd fell 6.3 percent to 1,430.15 rupees, while top software services exporter Tata Consultancy Services dropped 6.8 percent to 810.90 rupees. The sector index fell 5.6 percent.
Elsewhere in the region, Karachi’s 100-Share index fell 0.93 percent to 15,125.89 points and Colombo’s All-Share index lost 0.56 percent to 2,550.47.
