Indian shares to witness worst month since October after foreigners pull out $2 billion

The benchmark S&P BSE Sensex fell 0.2% to 37,815.94 as of 9:56 a.m. in Mumbai. This comes amid foreign outflow after Modi govt's spending plan was revealed in the Budget.

A man looks toward a screen and an electronic ticker board outside the Bombay Stock Exchange (BSE) building in Mumbai | Photo: Dhiraj Singh | Bloomberg

Mumbai: Indian equities declined after a fluctuating start and key indexes were headed for their worst month since October last year.

The benchmark S&P BSE Sensex fell 0.2% to 37,815.94 as of 9:56 a.m. in Mumbai. The NSE Nifty 50 Index dropped 0.4% to 11,244.50. Both gauges were poised for the seventh day of decline in the past eight sessions, sliding more than 4% this month.

Foreigners have pulled out over $2 billion in July after the government’s spending plan earlier this month failed to excite investors, levying an additional tax on higher incomes. That has sent key equity indexes down more than 6% from their record closes in June. Focus will now shift to the US interest-rate decision on Wednesday — with an expected cut of 25 basis points — and a local monetary policy meeting on 7 August, with a similar reduction expected.

Strategist View

• “With an expected rate cut by the US and continued easing of monetary policy locally, appetite for risk assets such as stocks is likely to increase,” said Purvesh Shelatkar, head of institutional brokering at Monarch Networth Capital Ltd. in Mumbai.
• Still, the global slowdown and continued sell-off in local equities by foreigners remain “key risks,” he said.

The Numbers

• Sixteen of the 19 sector indexes compiled by BSE Ltd. retreated, paced by a gauge of automobile stocks.
• Outflow of more than $2 billion from overseas investors so far this month is the most in nine months.
• Twenty-three of the 31 Sensex members and 41 of the 50 Nifty companies fell.
• Indiabulls Housing Finance Ltd. slid 7.9%, the most among Nifty members, after a letter written by a lawmaker from the ruling national party accused it of embezzlement of funds. The mortgage financier denied the allegations in an exchange filing.
• ICICI Bank Ltd. gained the most among Sensex and Nifty stocks, rising 4.4%, after reporting a drop in bad loans.
• Vodafone Idea Ltd. slumped 16%, a record fall, after reporting a wider-than-estimated loss in the three months ended June. The wireless carrier also lost its spot as the company with most subscribers in India as rival Reliance Jio Infocomm Ltd. replaced it when the latest numbers were released for July. –Bloomberg