Nifty, Sensex see heavy selloff, close at worst levels since mid-May

File photo. Photograph:( Reuters )

Reuters Bengaluru, Karnataka Jul 19, 2019, 04.22 PM (IST)

Indian shares fell sharply on Friday afternoon to close at their worst levels since mid-May, as investors fretted over weak corporate earnings and the government's refusal to tweak the surcharge on foreign investors.

The broader NSE Nifty dropped 1.53 per cent to 11,419.25, while the benchmark BSE Sensex closed 1.44 per cent lower at 38,337.01. The indexes posted their second straight weekly loss.

Whatever hopes there were around the finance minister removing the surcharge on foreign investors have been dashed, said Neeraj Dewan, a director with Quantum Securities, New Delhi, adding that sentiment had also been dampened by weak earnings by some lenders.

Finance Minister Nirmala Sitharaman said on Thursday that foreign portfolio investors could instead register as companies to avoid a new tax surcharge imposed on individual tax payers as well as trusts in the budget for the fiscal year that began on April 1.

Corporate earnings for the June quarter have also failed to impress investors, with several lenders flagging stress in their books. IT heavyweight Tata Consultancy Services Ltd, which kicked off the results season last week, also reported lower margins.

Financial and auto stocks accounted for most of the losses.

Bajaj Finance Ltd declined 4.2 per cent, while Indiabulls Housing Finance Ltd dropped 3.7 per cent.

RBL Bank Ltd plunged 13.7 per cent to its lowest close since Oct. 29 after the lender highlighted risks to its asset quality, despite reporting a 41 per cent jump in quarterly profit.

Larger rival Yes Bank Ltd reported a weak quarter earlier this week, sparking a sell-off in its stock. Its shares declined 3 per cent in the current session.

Auto maker Mahindra and Mahindra Ltd was the biggest loser in the market, sliding 4.4 per cent to its lowest close since Feb. 2016, while peers Tata Motors Ltd and Eicher Motors Ltd dropped 3.7 per cent-4 per cent, driving the Nifty Auto index 3.3 per cent lower.

Meanwhile, electricity producer NTPC Ltd was the top gainer among the seven stocks in the green on the NSE Nifty, closing 2.2 per cent higher.

The Mumbai market moved inversely to its global peers, which rose as investors bet on a US interest rate cut at the end of July after a speech by a top Federal Reserve official further cemented expectations for one.
 

Story highlights

The broader NSE Nifty dropped 1.53 per cent to 11,419.25, while the benchmark BSE Sensex closed 1.44 per cent lower at 38,337.01. The indexes posted their second straight weekly loss.