Markets drop most in 2 weeks

ONGC, RIL, Hindalco and Tata Motors among key losers

Stocks declined, with the benchmark index erasing gains in the last half hour of trade, as concerns grew about the government's economic reforms and sliding commodity prices weighed on energy companies and metalmakers.

Oil & Natural Gas Corp, the top explorer, and Reliance Industries, owner of the world's largest refining complex, slid at least 1.5 per cent. Hindalco Industries dropped for the first time in three days, while Vedanta, the biggest aluminum and copper producer, decreased the most in a week. Tata Motors dropped the most in two weeks on concern its luxury unit Jaguar Land Rover will face more pressure in China.

The S&P BSE Sensex fell 0.5 per cent to 28,101.72, erasing gains of as much as 0.6 per cent.

The CNX Nifty Index on the National Stock Exchange of India fell 0.5 per cent to 8,525.60. The India VIX index climbed 3.7 per cent to 15.47 at the close, its third day of gains after a 14 per cent retreat in July.

A parliamentary session ends this week, with lawmakers so far unable to pass bills related to a goods-and-services-tax and the buying of land as the opposition demanded resignations of three key members of Prime Minister Narendra Modi's party over graft allegations.

"Reforms seem to have been stuck, whether it is the GST, land or labour reforms," Dipen Sheth, the head of institutional research at HDFC Securities Ltd., said by phone. "Structural reforms, not just falling commodity prices, are needed to lure overseas flows. It is the policies that make a difference."

Oil dropped below the lowest close since March 2009. The Bloomberg Commodity Index lost 1.4 per cent last week, a fifth-straight loss and the longest slide since January. Eighteen of the 22 products tracked by the gauge are stuck in bear markets.

Oil & Natural Gas slipped 2.8 per cent, the worst performer on the Sensex, and Reliance lost 1.6 per cent. Hindalco declined 1.6 per cent and Vedanta lost 1.2 per cent.

Earnings scorecard
Tata Motors decreased two per cent after profit slumped 49 per cent to Rs 2,770 crore ($434 million) in the June quarter.

Fifteen of the 23 Sensex companies, or 65 per cent, that posted results for the quarter ended June 30, matched or exceeded estimates, versus 40 per cent in the March quarter.

Indian Oil Corp. surged to a one-week high. The state-owned refiner benefits as lower oil prices trim input costs and ease the subsidy burden. The stock has risen 29 per cent this year.

The CNX Nifty Index on the National Stock Exchange of India fell 0.5 per cent to 8,525.60. The India VIX index climbed 3.7 per cent to 15.47 at the close, its third day of gains after a 14 per cent retreat in July.

"Recent history shows volatility increases when the Nifty enters the 8,500-8,600 range, and a re-rating will depend on the pace and direction of the government's reform effort," Vinod Nair, head of fundamental research at Geojit BNP Paribas Financial Services Ltd., said by e-mail.

Global investors bought a net $18.8 million of domestic stocks on Friday, taking this year's inflows to $7.4 billion.

The Sensex has gained 2.2 per cent this year and trades at 15.7 times projected 12-month earnings. The MSCI Emerging Markets Index is valued at a multiple of 11.2.