BSE Sensex slides for seventh day as manufacturing slows

By Himank Sharma

MUMBAI (Reuters) - The BSE Sensex ended down for a seventh consecutive session as infrastructure stocks such as Bharat Heavy Electricals Ltd slumped after data showed manufacturing activity shrank the most in more than four years.

The HSBC Manufacturing Purchasing Managers' Index (PMI), compiled by Markit, edged down to 50.1 in July from 50.3 in May.

The index, which gauges business activity in Indian factories but not its utilities, has been running close to the 50 mark that separates growth from contraction since May, but has held above it for over four years.

The BSE Sensex ended 0.15 percent lower at 19,317.19, while the broader Nifty fell 0.25 percent to 5,727.85.

 

Markets opened positive on Thursday, gaining over 1 percent at the day's peak on relief that the U.S. Federal Reserve would not begin tapering its bond-buying programme any time soon, but receded later in the day on growth worries.

Goldman Sachs downgraded its rating on Indian stocks to "underweight" on concerns about delayed growth recovery and rising vulnerabilities for the economy.

"Sentiment continues to be very, very cautious," said Deepak Jasani, head of retail research at HDFC Securities.

"Most people think a rebound is due after such a steep fall, but that won't happen until the troika of rupee, the fiscal deficit and interest rates come under control and the question is whether the government can do anything at all to control them."

Falling growth and a drying order pipeline drove shares in infrastructure companies lower.

Bharat Heavy Electricals Ltd fell 4.86 percent, while Jaiprakash Associates Ltd ended 10.24 percent lower.

Private sector lenders recovered from recent steep falls, but government-owned banks fell, as they are seen as holding high-risk assets most prone to default in a weak economy.

HDFC Bank Ltd gained 3.68 percent, Yes Bank Ltd rose 1.13 percent and ICICI Bank Ltd ended up 0.57 percent.

Among state-owned banks, Bank of Baroda fell the most, dropping 8.36 percent after reporting higher non-performing assets in the April-June quarter.

Punjab National Bank and State Bank of India also fell.

Financial Technologies (India) Ltd shares fell 64.5 percent after a commodities exchange it owns suspended trading in one-day forward contracts.

Among the gainers, state-owned mining and power company Neyveli Lignite Corp Ltd rose 1.84 percent after the government set a higher price band for a stake sale in the company.

Maruti Suzuki India Ltd , India's biggest carmaker, rose 1.06 percent after monthly sales rose for the first time this year in July.

Utility vehicle maker Mahindra and Mahindra , however, fell 4.38 percent after posting a 21 percent drop in vehicle sales.

(Reporting by Himank Sharma; Editing by Prateek Chatterjee)