Mumbai: Indian stocks plunged 590 points to end below the 18,000-mark, with the benchmark index ending a three-day climb, as the weakening of the nation's currency to a record spurred concern capital outflows may accelerate.
HDFC Bank fell the most in more than four years, dragging a measure of 13 lenders to a 19-month low. Larsen & Toubro declined to its lowest level since January 2012. Power-equipment producer Bharat Heavy Electricals slumped 10 per cent.
The S&P BSE Sensex sank 3.2 per cent to 17,968.08 at the close in Mumbai. The measure has fallen 11.5 per cent from this year's high on July 23 on concern steps to stem a record slide in the rupee will weigh on economic growth. Global funds have pulled $12 billion from local equities and bonds since June 1, fuelling the currency's slide, data show.
"The sharp fall in the rupee is what's worrying investors the most," Rahul Chadha, co-chief investment officer at Mirae Asset Global Investments Hong Kong., which has $40 billion in equities, said on Bloomberg TV yesterday. "Most foreigners are overweight on India and their risk managements' are actively questioning the huge overweight position."
The rupee has depreciated 17 per cent this year. That means dollar-based investors have lost 23 per cent from Sensex shares this year, according to data. The gauge has slid 7.5 per cent in local currency terms this year.
Brent crude climbed 3 per cent in August, raising costs for Asia's third-largest economy that buys almost 80 per cent of its oil abroad. India is also the world's top buyer of gold, the price of which gained 14 per cent this quarter. Costlier imports are adding pressure on India's balance of payments at a time when the prospect of a cut in US stimulus is fuelling fund outflows.
HDFC Bank plunged 8.1 per cent to Rs561, the most since January 7, 2009. State Bank of India decreased 2.4 per cent to Rs1,520, its lowest level since May 2009. ICICI Bank slid 3.4 per cent to Rs802. The S&P BSE Bankex lost 5.3 per cent to its lowest close since January 2012. Mortgage provider HDFC slumped 7.8 per cent to Rs686, the biggest fall since July 2009.
ITC tumbled 3.1 per cent to Rs297. Hindustan Unilever lost 2.1 per cent to Rs595. Sun Pharmaceutical lost 3.9 per cent to Rs496.
"The decline in quality and defensive stocks shows loss of patience by foreign investors," said Taher Badshah, senior vice president and co-head equities at Motilal Oswal AMC, which has $300 million in assets. "Negativism is spreading to more stocks and sectors."
International investors sold Indian stocks for a sixth day on August 26, offloading a net $86.1 million of shares.