Mumbai, July 29: The BSE Sensex slid 1 percent on Tuesday, its third consecutive fall, as a sell-off in Shanghai stocks on fears Chinese banks may begin to restrict lending weighed on markets across Asia.
Chinese stocks dropped 5 percent, their biggest fall in eight months, dragging down India’s main index as much as 2.9 percent before it pared losses as analysts said any moves by banks in China were unlikely to affect India.
China’s banking regulator on Tuesday had urged lenders to ensure that loans enter the real economy, rather than flow into property and stock markets for speculation.
“Maybe China wants to suck up some liquidity in its market, but that has nothing much to do with India,” Deven Choksey, chief executive of K.R. Choksey Shares and Securities, said.
“Our market was already set for a correction, and that is what we are seeing today.”
Dealers said disappointing results from Reliance Industries, Hindustan Unilever, Sun Pharmaceutical and Tata Steel had made investors cautious and weakened the market momentum seen since mid-July.
Sun Pharma, India’s top drug maker by market value, shed 5.2 percent to 1,188.25 rupees after it lagged forecasts with a 67 percent drop in quarterly net profit.
Top realty firm DLF fell 6.6 percent to 398.05 rupees, a day after climbing 3.4 percent. Hindustan Unilever declined 3.2 percent to 268.05 rupees, extending losses of 7.3 percent on Tuesday after it posted a lower-than-expected profit.
Tata Steel eased 5.8 percent to 441.90 rupees, after reporting a bigger-than-than expected 47 percent fall in profit from its Indian operations.
Non-ferrous metals producer Sterlite Industries slipped 5.5 percent to 621.15 rupees as prices of base metals in Shanghai fell sharply on Wednesday. The company posted a 42 percent fall in its June-quarter net profit.
The 30-share BSE index ended down 1.03 percent, or 158.48 points, at 15,173.46, with 23 stocks declining, after rising as much as 0.3 percent during trade.
Reliance Industries, which has the most weight in the main index, rose 0.8 percent to 1,926.30 rupees after sliding 6.3 percent over the past three sessions.
“The market is in consolidation mode. Since the large caps have already run up quite a bit, they are taking a breather,” said Gajendra Nagpal, chief executive of Unicon Financial Intermediaries.
“There are no major events the market is looking forward to.”
The Indian market is almost 90 percent above a 2009 low on March 6, and is up over 57 percent this year — fourth-best among major benchmark indices tracked by Reuters — after slumping by more than half in 2008.
Valuations are rich, with the main index trading at 17.3 times one-year forward earnings, outstripping benchmarks in several other emerging markets such as South Korea, Indonesia, Philippines and Brazil that are at multiples of about 13. Russia
trades at 7.5 times forward earnings.
In the broader market on Wednesday, losers led gainers 1,565 to 1,096 on relatively heavy volume of 540 million shares.
The 50-share NSE index ended down 1.11 percent at 4,513.50.
Most Asian shares were lower on Wednesday, with MSCI’s measure of Asian markets other than Japan falling 1.8 percent. Japan’s Nikkei rose 0.3 percent.
At 1045 GMT, the pan-European FTSEurofirst 300 index of top shares was up 1 percent.
MAIN TOP 3 BY VOLUME
* Unitech on 30 million shares
* Suzlon Energy on 21.5 million shares
* Reliance Natural Resources on 21.4 million shares
STOCKS ON THE MOVE
* Alembic Ltd rose 3.7 percent to 41.05 rupees after the drugmaker posted a consolidated net profit in the June quarter, compared with a loss in the same period a year ago.
* Varun Shipping Co Ltd fell 4.1 percent to 56.25 rupees after it said low tanker freight rates dragged its net profit down by over 90 percent in the April-June quarter.
—-Agencies