Indian stocks dropped the most in three weeks amid concern corporate earnings may disappoint and as lower-than-average monsoon rains threaten the nation’s efforts to tame inflation and spur economic growth.
The BSE India Sensitive Index, or Sensex, lost 0.7% to 17,391.98 at the 3.30pm close in Mumbai, its biggest drop since June 18. India’s June-September monsoon rains, which account for more than 70% of annual rainfall, are 25% below a 50-year average, the weather bureau said yesterday. Stocks also fell as data on July 6 showed American employers hired fewer workers than forecast last month, a sign the US labour market is making scant progress toward reducing joblessness in the world’s biggest economy.
“We are getting more concerned about the growth environment,” Prabhat Awasthi, head of India equity research at Nomura Holdings Inc, said in a Bloomberg UTV interview today. “Global growth issues have become larger and these additional pressures make one wary not just about India’s economic growth but also about earnings growth.”
The rupee dropped to the lowest level in a week after US jobs data missed economists’ estimates, heightening concern the global economy is slowing and damping demand for riskier assets.
The currency declined 0.9% to 55.9350 per dollar in Mumbai, according to data compiled by Bloomberg. It touched 56.0750 earlier, the weakest level since June 29. The dollar will strengthen further, pushing the rupee as low as 56.50 this week, according to Harding.
“The risk factor for the rupee is the strong US dollar,” J Moses Harding, executive vice president at IndusInd Bank Ltd in Mumbai, wrote in a note to clients yesterday. “Sentiment on domestic cues is yet to turn positive as delivery of expectations is still a work in progress.”
from gulf times.