Indian shares fell to near 3-month lows on Monday as global risk aversion sparked broad-based selling in domestic bluechips, including in Larsen & Toubro and Maruti Suzuki, at a time when sentiment is already weak. European shares, the euro and oil prices all fell on Monday as political stalemate in the US and Italy and China's plans for tighter controls on its property sector hit sentiment.
The global uncertainty has come on the heels of broad disappointment over the 2013/14 budget unveiled on Thursday and weak October-December growth data, with investors expecting a rebound in markets if the Reserve Bank of India cuts interest rates later this month. "After an ordinary budget, RBI policy would certainly be the next trigger to watch, but risks have gone up marginally in US and Europe, which will have implications on allocations towards India as well," said Aneesh Srivastava, chief investment officer at IDBI Federal Life Insurance, who oversees 29 billion rupees in assets.
Slowing growth and ballooning deficit are also hurting the market sentiment, Srivastava added. The benchmark BSE index fell 0.21 percent, or 40.56 points, to end at 18,877.96, near its lowest close since November 27 hit on Thursday. The broader NSE index fell 0.37 percent, or 21.20 points, to end at 5,698.50, closing below the psychologically important 5,700 level.
A global risk-off mood sparked some broad selling in bluechips, including in Larsen & Toubro Ltd, which fell 2.55 percent, and Maruti Suzuki India, which ended down 1.8 percent. Shares in India's cement manufacturers fell on fears that a series of diesel price increases could hit February sales and margins, with some dealers citing market whispers of a 15-18 percent decline in sales last month. Ambuja Cements Ltd fell 2.9 percent, ACC Ltd ended down 3.6 percent and UltraTech Cement Ltd declined 2 percent.
Bajaj Auto ended 1.9 percent lower after the company reported a 3 percent fall in its sales for the month of February. Shares in hydropower utility NHPC Ltd slumped 24.1 percent, after falling as much as 29.9 percent earlier to a five-month low, with brokers citing heavy selling by some institutional and high net-worth investors.
However, shares in Reliance Industries gained 0.3 percent after Morgan Stanley upgraded the stock to "overweight" from "underweight," citing an improving operating environment across its core businesses. Tata Motors gained 0.5 percent as unit Jaguar Land Rover is investigating the potential of manufacturing cars in India to build on its growth in emerging markets.