Sensex, Nifty post worst weekly fall in over 3 months
MUMBAI: Indian stocks dropped for the fourth session in a row on Friday, logging their worst weekly performance since August, after investors ignored the pickup in economic growth and the worrying fiscal situation took centre stage.
Rising oil prices, the US federal Reserve’s expected interest rate hike later this month and a decline in other equity markets around the world also weighed on sentiment.
BSE’s 30-share Sensex shed nearly 316.41 points, or 0.95%, to close at 32,832.94 points. The National Stock Exchange’s 50-share Nifty shed 1.02%, or 104.75 points, to close at 10,121.80 points.
It was the lowest close since November 15 for the Sensex and Nifty. For the week, Sensex and Nifty shed 2.51% and 2.58% respectively, logging their biggest losses since the week ended August 13.
A pickup in economic growth failed to lift investor sentiment. Gross domestic product (GDP) growth in Asia’s third-largest economy quickened to 6.3% in the September quarter, up from a three-year low of 5.7% during April-June, an indication that the Indian economy has shaken off the lingering effects of the note ban last year and the goods and services tax (GST) roll out on July 1.
Manufacturing activity accelerated due to restocking of warehouses by companies after temporary disruption caused by uncertainties surrounding implementation of GST.
“India is really grappling with its own problems,” said Shankar Sharma, vice-chair- man and joint managing director of First Global Securities Pvt. Ltd.
“The GDP data, I would say, is not great. Oil is a big worry. There is absolutely no fiscal room left after the recent fiscal deficit data. Current account deficit is a bother. Oil looks headed higher to 75 (US dollars a barrel). It’s the harsh truth that when commodities do better, India lags behind,” he added.
Crude oil prices have risen 5.03% in the last two months to trade at $63.26 a barrel. On Thursday, the Organisation of Oil Exporting Countries (Opec) and its allies voted to extend oil production cuts till the end of 2018, which is expected to keep prices high.
To some, climbing oil prices and the threat to the fiscal deficit target weren’t much of a bother, and the long-term India story ruled intact.
“I think this correction is more of profit-booking, and not a structural correction,” said Rakesh Rawal who heads private wealth management at Anand Rathi Financial Services Ltd. “There is always be some level of mismatch in expenditure and inflows, but as long as finance minister’s commitment to maintain the balance is in place, it doesn’t bother me.”
Government accounts data released Thursday show that April to October fiscal deficit had reached 96% of the budgeted full-year number.
In Friday’s trade, 27 of 30 Sensex stocks closed lower. Declining shares outnumbered advancing ones in the ratio of 1.6:1.0.
All the sectoral indices closed lower, with BSE Realty index and BSE Utilities index leading the losses as they shed 1.99% and 1.77%, respectively.
Conglomerate Reliance Industries Ltd and the secondlargest technology company Infosys Ltd contributed the most to the Sensex’s losses as they dropped 1.38% and 1.69%, respectively.