Indian equities lost ground for the seventh straight session on Monday — the longest selling streak in 15 months...
Indian equities lost ground for the seventh straight session on Monday — the longest selling streak in 15 months — as investors chose to take risk off the table. The Sensex crashed 490.52 points or 1.71% to settle at 2,8227.39 points while the Nifty closed at 8526.35, down 134.70 or 1.56% from the previous close. The 30-share Sensex has lost nearly 1,500 points or 5% in the last seven sessions, after having risen nearly 10% from mid to end January.
While the possibility of the Aam Aadmi Party coming to power in Delhi, defeating the BJP, was cited as one reason for the profit-taking, fund managers are also concerned about the mediocre results put out by corporates in the three months to December. Almost all heavyweights have reported numbers that are below expectations and the disappointing results reported by heavy engineering company Larsen & Toubro (L&T) on Monday added to the gloom.
Andrew Holland, CEO, Ambit Investment Advisory, believes stocks could extend their decline in coming days if global cues are negative. “The exit polls forecast is a wake-up call for the Modi government, a signal that it can’t be complacent,” Holland said.
“The year 2014 was about hope and belief and this year has to be about delivery of promises made by the ruling party before it won the general elections last year,” he added. Globally, weak Chinese trade data and Greece’s firm stance on anti-austerity demands have forced money managers to reassess their exposure to equities, analysts said. In Europe, major indices were trading down 1-2%, and American indices futures were quoting 0.5% lower at the time of going to press.
In Asian markets, most major Asian indices ended weak. “China’s weak economy will continue to affect the developing countries, which depend on Chinese demand for their exports,” Bloomberg quoted Komsorn Prakobphol, an investment strategist at Tisco Financial Group, as saying in a report. “The strong stance of both Greece and other European countries will increase volatility in the global financial markets,” Prakobphol added.
Back home, foreign portfolio investors stand net sellers for February. Foreign money managers sold shares worth $106.2 million (Rs 660.30 crore) in the cash segment on Monday, provisional data from stock exchanges showed, taking the quantum of sales in February to more than $215 million. The BSE Small-cap index declined for the third straight session, while the Mid-cap index ended down for the fifth session in a row. Both indices have lost more than 4% in the last one week after marginal gains.
The BJP has been nearly unbeatable since winning the biggest Indian parliamentary mandate in 30 years and coming to power in states such as Maharashtra and Haryana, which are crucial to overcoming opposition in Parliament’s Upper House and passing Bills to allow more investment and ease land clearances. A defeat in the Delhi elections, analysts expect, will pressure the government to deliver on job creation, upgrading infrastructure and making it easier for foreigners to do invest in India.
All 11 industry groups on the BSE ended in the red, led by capital goods and engineering companies. The BSE Capital Goods index lost over 4.3% after L&T’s (-6.6%) failed to match expectations. The company’s October-December consolidated profit grew 9% year-on-year to Rs 870 crore while the Street had expected L&T’s profit to grow to Rs 1,134.5 crore during the quarter, showed Bloomberg estimates. “Corporate earnings have also been disappointing and that should not come as a surprise as the outlook was only expected to improve after a lag,” said Amar Ambani, head of research at IIFL.