MUMBAI (Reuters) – The BSE Sensex posted its biggest percentage fall in four weeks on Monday, led by a sharp decline in Infosys after the software service exporter said U.S. authorities were scrutinising the eligibility documents of workers in the United States.
The broader sentiment was also dented by a Reuters report that Macquarie’s (MQG.AX) Asia hedge fund has exited its short positions in Indian single stock futures because of uncertainty over a proposed set of tax rules that could impact foreign investors.
The Reuters report on Macquarie exiting some of its short positions and switching to futures contracts listed in Singapore Exchange to avoid potential tax issues was seen as a catalyst to some of the selling.
Indian shares have been hit before by fears about foreign selling, although data shows overseas investors have continued to net purchase domestic stocks in April, albeit at a slower pace since last month.
Hitash Dang, a vice president at Jaypee Capital, said the news about the Macquarie hedge fund was negative because others could follow.
“This is a bad trend, it will further bring down the total commitment to the market in terms of the volumes,” he said.
The BSE Sensex fell 1.6 percent to 17,096.68 points, marking its biggest daily fall since March 26.
The Nifty lost 1.71 percent to 5,200.60.
The falls in Indian indices were worse than the 1.1 percent fall in the regional MSCI Asia-Pacific index that excludes Japan.
Among individual decliners, Infosys (INFY.NS) dropped 4 percent after saying it was under scrutiny from the U.S. Department of Homeland Security for likely errors in the employment eligibility documents for its foreign staff in the United States.
Infosys ending at their lowest since mid-September on Monday, continuing to be hit hard since it posted disappointing earnings on April 13.
Shares in DLF (DLF.NS) dropped 4.2 percent after the Bombay Stock Exchange (BSE) said it will replace the company in the Sensex with pharmaceuticals company Dr Reddy’s Laboratories (REDY.NS).
DLF has taken a beating from investors with the company’s market value eroding almost 84 percent to $6.4 billion compared with a peak of over 2 trillion rupees in early 2008.
Bharti Airtel (BRTI.NS) lost 3.7 percent and Idea (IDEA.NS) lost 5.4 percent after a government regulator proposed a much higher-than-expected base price for an auction of 2G radio spectrum. The news was first reported by TV channel CNBC TV18.
However, among gainers, Reliance Industries (RELI.NS) rose 0.75 percent after investors bet refining and petchem margins have hit near-trough levels after the company posted its second consecutive quarterly drop in profit late on Friday.
(Editing by Rafael Nam)