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Equities

India shares decline amid selloff in Asian, European markets

Political uncertainty in Italy prompts investors to dump risk assets

MUMBAI (NewsRise) -- Indian shares declined Tuesday, joining a selloff in Asian and European markets amid political uncertainty in Italy.

The BSE Sensex fell 0.6% to 34,949.24 and the Nifty 50 Index slipped 0.5% to 10,633.30, led by banking stocks. ICICI Bank and State Bank of India were among the major losers, falling by at least 2.7%. Engineering conglomerate Larsen & Toubro added 0.2% to 1,380.10 rupees after reporting a better-than-expected 4.7% increase in March quarter net profit. The company estimated a 10% to 12% growth in order inflows and a 12%-15% increase in revenue for this fiscal year. Larsen reiterated its return-on-equity guidance of 18% by financial year 2021.

Macquarie said in a note that the Mumbai-based company's fourth-quarter operating performance surprised positively on the back of margin expansion and higher-than-expected orders. Macquarie reiterated its 'outperform' rating and a target price of 1,821 rupees for the stock, noting that the RoE guidance pointed to potential doubling of profits in three years.

The U.S. index futures declined and benchmark gauges of South Korea, Japan, and Hong Kong closed lower as political turmoil in Italy prompted investors to exit risk assets. Italy's president on Monday appointed a former International Monetary Fund official as interim prime minister, setting the country on a path to fresh elections. The new elections, viewed by analysts as a sort of referendum on Italy's membership of the euro, could portend a period of high uncertainty for markets worldwide.

Italy's 10-year borrowing cost jumped to its highest level in almost four years and the country's benchmark equity index was last down 2.7%. The euro dropped to its lowest level this year.

The increase in perceived political risks prompted a move into safe havens with yield on the 10-year Treasury falling 8 basis points and the yen rising above 109 against the dollar.

Mahindra & Mahindra climbed 2.3% after the automaker reported a more than 70% surge in standalone March-quarter profit. Aurobindo Pharma tumbled 4.2% after fourth-quarter net profit missed market expectations. Bharat Heavy Electricals advanced 5.6% after the state-run electrical equipment maker's March quarter net profit more than doubled.

Hindustan Petroleum, Bharat Petroleum, and Indian Oil advanced at least 0.8% each, adding to Monday's rally after Brent crude retreated to near $75 per barrel.

Oil India rose 1.9% after reporting a better-than-expected increase in net profit for the January-March period. Bank of India declined 5.8% after its March quarter loss was more than double of what analysts polled by Bloomberg had estimated.

Manpasand Beverages was locked in the lower circuit of 20% for the second day after external auditor Deloitte Haskins & Sells quit ahead of the company's board meeting scheduled for May 30.

--Nimesh Vora

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