Sensex slumps most since April, falls 1.96% as RIL drags

Reliance slides 4.42% after shelving stake sale to Aramco

28/02/2013 MUMBAI: A tree shed all its leaves outside the Bombay Stock Exchange reflecting the BSE Sensex crashing on February 28, 2013 during the presentation of the union budget by Union Finance Minister Mr P. Chidambaram. Photo: Paul Noronha

The benchmark S&P BSE Sensex slumped the most in about seven months on Monday, sliding 1.96% amid concerns about the government’s ability to sustain reforms after the announcement that the three contentious farm laws would be repealed, and dragged down by Reliance Industries’ 4.42% decline.

The index fell 1,170.12 points to 58,465.89, the lowest close since mid-September. The top losers included Bajaj Finance (5.74%), Bajaj Finserv (4.69%), NTPC (3.73%) and Titan (3.49%).

Reliance (RIL) slid after a proposed $15-billion stake sale in its oil-to-chemicals business to Saudi Arabia’s Aramco was shelved.

Analysts said Paytm’s disappointing debut and further slide had exacerbated concerns about valuations.

“Subdued listing and continued weak trading of Paytm is a big sentimental setback to the domestic market, which was thriving on the strong primary market,” Vinod Nair, head of research at Geojit Financial Services, said in a note. “It will impact the inflow of money from the retail segment, which has been a key player during the year,” he added.

“High growth expectations have been built into stock market valuations for quite some time now,” said Rahul Shah, Co-Head of Research, Equitymaster. “And if these expectations don't materialise soon enough, we may see further downward pressure on prices.”

“From a valuations perspective, the broader market is already quite expensive. The only thing holding it up was hopes of a quick recovery in corporate earnings. Any delay there... and there could be more downside,” Mr. Shah added.