Indian shares fell 1.2 percent on Wednesday, with State Bank of India, the country's top lender, falling the most in nearly six months, after a rise in non-performing assets hit investor confidence. Financials led the decline after ratings agency Moody's lowered its outlook on the country's banking system, citing slowing growth and concerns about asset quality.
Lingering concerns over the health of the domestic economy, including a widening fiscal deficit and slowing exports also weighed on investor sentiment, traders said. The main 30-share BSE index ended down 1.18 percent at 17,362.10 points - its lowest close in two weeks -with 24 of its components falling.
State Bank of India fell 6.8 percent, despite a forecast-beating second-quarter profit after a rise in non-performing assets. The stock closed at 1,862.05 rupees, down 6.8 percent - its biggest single day loss since May 17. Rivals ICICI Bank, HDFC Bank and Axis Bank also fell between 1.4 percent and 2.5 percent. The BSE banking index closed down 2.62 percent.
Non-performing assets may continue to rise for another quarter or two, but banks are making all the due provisioning required and cleaning their books at a very healthy rate, said D.K. Aggarwal, chairman at SMC Investments and Advisors. Auto stocks were hit, with India's top carmaker Maruti Suzuki falling 4.2 percent, after Indian car sales suffered their biggest fall in a decade.
Car sales fell 23.8 percent in October, the biggest percentage drop since December 2000, an industry body said, on higher interest rates and vehicle costs and labour unrest at Maruti, where sales fell by half. The auto index closed down 1.72 percent. Export-driven Tata Consultancy Services rose 3.7 percent after it said it won a $2.2 billion order from UK-based pensions and insurance provider Friends Life. The stock closed up 1.6 percent. The 50-share NSE index closed down 1.29 percent at 5,221.05 points. In the broader market, there were 3.03 losers for every gainer on total volume of about 546 million shares.
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