A sluggish domestic environment and declining exports cause a sell-off in the markets.
Indian stocks fell, with the key index posting its second monthly drop. Reliance Industries led declines as the economy grew at the slowest pace since 2003 and missed economists' estimates. Reliance, the nation's most valuable company, fell 1.9 percent. Grasim Industries, India's third-biggest cement maker, dropped 6.3 percent, the most in almost four months.
“GDP was disappointing,” said Jayesh Shroff, who helps manage $1.9 billion in equities at SBI Asset Management Co. in Mumbai.
The Bombay Stock Exchange's Sensitive Index, or Sensex, declined 63.25, or 0.7 percent, to 8,891.61. The index fell 5.7 percent this month, its second monthly drop. The S&P CNX Nifty Index on the National Stock Exchange slid 0.8 percent to 2,763.65. The BSE 200 Index declined 0.4 percent to 1,044.94. S&P CNX Nifty futures for March delivery dropped 1.4 percent to 2,727.
Asia's third-largest economy expanded 5.3 percent in the three months to December 31 from a year earlier after a 7.6 percent gain in the previous quarter, the government said in a statement. Economists expected a 6.1 percent increase. India's farm output fell 2.2 percent in the quarter ended December 31 from a year ago.
“The fall in farm output was a negative surprise,” Shroff said. India's economic expansion is weakening as the world recession caused exports to decline last quarter for the first time in seven years. Local demand has been hit because commercial banks, laden with high-cost deposits, have been slow to reduce their lending rates in response to the central bank's rate cuts.
Reliance fell 1.9 percent to Rs 1,266.05. Grasim dropped 6.3 percent to Rs 1,373.10, its biggest decline since November 5. ACC, India's biggest cement maker, slid 3.6 percent to Rs 540.05.
Overseas investors sold a net Rs 453 crore ($90 million) of Indian stocks on February 25, according to the nation's market regulator. The following shares were among the most active on the exchange.
Ranbaxy Laboratories dropped 4.7 percent to Rs 161.80, its lowest since July 2001. The No. 1 drugmaker extended yesterday's 18 percent drop after US regulators said it won't be allowed to introduce new generic drugs from one of its factories after it falsified data about products' shelf lives.
Reliance Communications dropped 2.2 percent to Rs 155.45. India's second-largest mobile-phone operator was downgraded to “sell” from “hold” at Deutsche Bank AG.
Satyam Computer Services fell 8.4 percent to Rs 41.35. The company which is at the centre of India's biggest corporate fraud inquiry may accept bids from companies not in the technology industry, according to reports.
Tata Steel rose 6 percent to Rs 172.80. India's largest producer of the alloy said profit including unit Corus Group dropped to Rs 814 crore in the three months ended December 31. Analysts had estimated a median loss of Rs 470 crore. Sales rose 4 percent to Rs 33,190 crore.
Unitech fell 2.3 percent to Rs 28.25. India's second-biggest developer by assets sold its Courtyard by Marriott hotel in Gurgaon, near New Delhi, to local businessman Roop Madan. The developer sold the hotel for about Rs 230 crore, Madan said in a phone interview.
United Spirits added 3.8 percent to Rs 622.75. India's biggest liquor maker and Diageo Plc are still in discussions about a possible stake-sale agreement. Vijay Mallya, chairman of United Spirits, said today it would be premature to speculate on a stake sale to Diageo or a timeframe for such a transaction, in an interview to CNBC-TV18.
The author is a Bloomberg News columnist. The opinions expressed are her own
