Indian shares fell 2.3 percent on Thursday, their biggest slide in nearly three weeks, amid concerns about slowing growth and the government's inability to pursue reforms, and uncertainty over whether the eurozone can agree on how to resolve its debt crisis. Traders said the Indian stock market would remain under selling pressure over the next one week on investor caution ahead of a slew of economic data.
India's industrial output and inflation data are due next week, while the central bank will review monetary policy on December 16. The 30-share BSE index closed down 2.3 percent - its biggest single-day fall since November 21 - at 16,488.24 points, after losing as much as 2.7 percent. All but five of its components were in the red. The benchmark, which is one of the world's worst performers this year, has fallen 19.6 percent since the start of the year.
The broader 50-share NSE index ended down 2.35 percent at 4,943.65 points. In the broader market, there were 3.6 losers for every gainer with 592.7 million shares changing hands. Brokerage CLSA on Thursday lowered its 12-month target for the benchmark to 17,000 from 18,200, citing earnings cuts for the current fiscal year ending March and the next year.
Automakers were among the big losers after an industry body said they may just break even this year and warned it would cut its sales outlook. Tata Motors, Maruti Suzuki and Mahindra & Mahindra shed 1.3 to 3.6 percent, pulling the BSE auto index down 1.6 percent. Rising finance costs and increasing prices have deterred buyers in Asia's third-largest economy in recent months, with car sales in April-November down 3.5 percent from the same period a year ago.
Worsening government finances and an announcement on Wednesday by the finance minister to suspend a policy decision to open the supermarket sector to foreign giants due to political opposition also hurt investor sentiment, traders said. Top listed retailer Pantaloon Retail, which has been hoping to tie up with foreign giants, fell 5.8 percent after the government on Wednesday suspended plans to open its $450 billion supermarket sector to foreign firms. Other retailers such as Vishal Retail and Shoppers Stop Ltd fell 6.2 percent and 1.36 percent.
Data showing India's annual food inflation slowed was offset by concerns the industrial output had declined for the month of October, said Ambareesh Baliga, chief operating officer at brokerage Way2Wealth Securities. Doubts about whether a European Union summit on Friday would be able to tackle the region's debt problems also kept investors wary because the crisis could trigger foreign fund withdrawals from emerging markets such as India, dealers said. Telecom stocks took a hit after downgrades on ratings of blue chip stocks in the sector.