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Indian equity benchmarks logged the seventh weekly loss in eight as liquidity shortage and selloff by foreign investors weighed on investor sentiment.
The S&P BSE Sensex fell 2.82 percent to 33,349 and the NSE Nifty 50 Index dropped 2.65 percent to 10,030. Investor wealth worth Rs 1.97 lakh crore was wiped out by losses on Dalal Street, according to data compiled by Bloomberg.
“We are seeing outflows by foreign investors because of a $50-billion-a-month of Fed’s liquidity withdrawal globally,” Ajay Bagga, executive chairman at OPC Asset Solutions, told BloombergQuint over the phone. That’s making emerging markets suffer, he said.
In India, the situation worsened because liquidity has dried up totally for non-bank lenders and housing finance companies, according to Bagga. The way out would be a fiscal or a monetary stimulus or a combination of both, he said, adding that earnings which have been so far mostly in line didn’t pacify the nervous markets.
Nineteen of 25 Nifty 50 companies that have reported earnings so far have either met or beaten estimates in the September quarter, data compiled by BloombergQuint showed.
“But the Street is looking beyond earnings as the market is worried about liquidity,” Vijay Chopra of Enoch Ventures said. Foreign portfolio investors are in an exit mode selling shares worth Rs 30,000 crore in a month, he said. “That’s huge and there have been days when FIIs sold shares worth Rs 5,000-6,000 crore a day. It’s serious I suppose there can be further correction.”
Yes Bank was the top Nifty loser this week after its profit missed estimates in the July-September quarter on higher provisions. The bank, which continued to show rapid growth in its loan portfolio, reported higher non-performing assets and also set aside a lower proportion of funds to cover for bad loans.
The stock fell 17.07 percent to Rs 180.70.
Among other shares, Equitas Holdings Ltd. and Ujjivan Financial Services Ltd. fell the most since listing after the Reserve Bank of India clarified that promoters of small finance banks must list their banking units separately within three years of operation in line with the regulator’s licensing requirements.
All sector gauges barring the Nifty Realty Index ended lower, led by the Nifty Pharma Index's 5.55 percent drop.
Big Talking Points This Week
- Lenders accept ArcelorMittal’s plan that promises 85% recovery.
- Shunting out CBI director blatantly illegal, ‘fixed tenure’ means functional tenure.
- Popularity of Indian stocks this decade adds to outflow risk.
- Jet Airways seeks loan moratorium to ease cash crunch.
- IL&FS exposure has IndusInd Bank investors worried.
- India's financiers face near record maturities to mutual funds.
- Bharti Airtel to raise $1.25 billion by diluting stake in African unit.
Earnings To Watch Next Week
- Larsen & Toubro
- Tata Motors
- Colgate Palmolive
- Gruh Finance
- HDFC AMC
- LIC Housing Finance
- Union Bank of India
- Tata Power
- Bank of Baroda
- Tech Mahindra
- Tata Global Beverages
- Canara Bank
. Read more on Markets by BloombergQuint.