The Bombay Stock Exchange's Sensitive Index dropped to its lowest in more than three years, led by ITC and State Bank of India (SBI), as investors sold stocks on increasing political uncertainty ahead of the national elections starting next month.
ITC, the country's biggest cigarette maker, fell 3.8 per cent to Rs 158.35, the lowest in more than four months. SBI, the nation's largest lender, declined 4.9 per cent to Rs 895.30, a two-year low. The Sensex fell 165.42 points, or 2 per cent, to 8,160.40, at close, the lowest since November 2, 2005. The S&P CNX Nifty Index on the National Stock Exchange dropped 1.8 per cent to 2,573.15. The BSE 200 Index slid 1.9 per cent to 963.41. S&P Nifty futures for March delivery shed 1.9 per cent to 2,558.
"The emergence of the communist parties and the smaller regional parties as an alternative to the national parties have added to the political uncertainty and is scaring foreign investors," said R K Gupta, who manages the equivalent of about $45 million at Taurus Mutual Fund in New Delhi.
| POLL AND FALL Sensex Stocks at 52-week low | |||
| (As on Mar 09) | Low Price | Close Price | % Chg# |
| SBI | 894.00 | 896.8 | -4.68 |
| Ranbaxy Labs | 134.10 | 135.0 | -4.46 |
| Reliance Com | 131.35 | 132.3 | -4.03 |
| L&T | 557.00 | 561.8 | -3.16 |
| Top 5 BSE Sectoral index Losers | |||
| 39881.00 | % Chg # | ||
| Realty | 1303.63 | -3.21 | |
| Bankex | 3633.23 | -2.78 | |
| FMCG | 1802.57 | -2.78 | |
| IT | 2025.29 | -2.27 | |
| Cap. Goods | 5453.49 | -1.94 | |
| #Over Previous Close # | |||
India's general elections will be held over five phases in April and May, the country's Election Commission had announced on March 2.
The Biju Janata Dal, which rules Orissa, broke its 11-year-old ties with the main opposition Bharatiya Janata Party(BJP)-led National Democratic Alliance, weakening the coalition, which is the main opposition to the ruling Congress Party-led alliance. A rally in Indian stocks will depend on the outcome of a general election in the country this year as government spending is needed to bolster economic growth amid the global recession, Morgan Stanley said.
Investors appear to be pricing in a coalition with a broad mandate led by either the ruling Congress or opposition BJP, Morgan Stanley analysts Ridham Desai and Sheela Rathi wrote in a March 6 report.
There's a 40 per cent probability that the elections will disappoint investors, the analysts said.
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"The next general elections become unduly important for the market," the analysts wrote. "If we get a fragmented verdict from the electorate, it could hamper policymaking, which in turn could have negative implications on growth and the markets."
Infosys Technologies, the nation's second-biggest software exporter, fell 1.4 per cent to 1,202.05 rupees on concern sales in the US, India's largest software market, will weaken as the global recession deepens.
ICICI Bank, the country's second-biggest lender, fell 2.3 per cent to Rs 262.95, its sixth day of declines. Reliance Industries, the nation's most valuable company, fell 1.4 per cent to Rs 1,153.35.
Overseas investors sold a net Rs 609 crore ($118 million) of Indian stocks on March 5, according to the nation's market regulator.
Maytas Infra rose 5 per cent to Rs 34.65. The company, partly owned by the family and the founder of Satyam Computer Services, reiterated it didn't commit any fraud. The Company Law Board's decision not to supersede the Maytas board is a vindication of its stand that no fraud was committed and no money has flowed in from Satyam, the company said in a statement.
Nestle India gained 1 per cent to Rs 1,430.85. The unit of the world's biggest food company reported fourth-quarter profit rose 29 per cent. Net income increased to Rs 121 crore in the three months ended December 31 from Rs 93.61 crore a year earlier, the company said on March 6.
Satyam Computer Services surged 16 per cent to Rs 48.80, a three-week high. The company invited bidders for a majority stake as the software company at the center of India's biggest corporate fraud probe seeks to regain confidence with investors and clients. Registrations begin On Monday and bidders should submit their interest by March 12, Satyam said. Larsen & Toubro expects to submit its interest, spokesman Deepak Morada said.
SpiceJet rose 9.2 per cent to Rs 13.39, the first gain in 11 days. The Indian discount carrier backed by billionaire Wilbur Ross is in talks about a possible merger or the purchase of a controlling stake in GoAirlines (India).
Sterlite Industries (India) shed 2.3 per cent to Rs 244.50. The nation's biggest copper producer agreed to buy Asarco, a bankrupt copper miner, for $1.1 billion in cash and a promissory note worth $600 million for its first purchase in North America, the company said on March 6.