Sensex down over a percent on renewed fears of US recession

The BSE Sensex fell 1.3 percent on Monday as investors dumped export-driven software services companies on renewed concerns the United States may again slip into recession.

Tata Consultancy Services and Infosys Ltd, that get most of their revenue from the US market, fell 2.3 and 3 percent respectively after Goldman Sachs cut its price target on the stocks.

A survey released on Monday showed India’s services sector grew at its slowest pace in more than two years in August, throttled by feeble expansion in new business as a faltering global economy and tight domestic monetary conditions weighed.

Lingering worries about the euro zone debt crisis also weighed on investor sentiment, while metal stocks were hit by worries government moves to stamp down on illegal mining would curtail supplies.

Janardhana Reddy, a former minister and mining baron in iron ore-rich Karnataka was arrested on Monday in connection with a mining scandal that may have cost the state $3.6 billion in lost revenue.

Hindalco Industries, the country’s largest aluminium producer, and iron-ore miner Sesa Goa fell nearly 4 and 3 percent respectively.

By 11:35 am the main 30-share BSE index was down 1.24 percent at 16,612.95 points, with all but six of its components in the red.

The benchmark had snapped a five-week slide and recouped 6.1 percent last week, mainly on bargain hunting. The index is one of the worst performers in the world this year, down about 18 percent since the start of January.

“There is hardly any positive news, until and unless the US government comes and gives a stimulus package. What we had seen last week was just some short covering,” said Jagannadham Thunuguntla, equity head at New Delhi-based SMC Capital.

Energy giant Reliance Industries, which has the biggest weightage on the benchmark index, lost 2.6 percent after rising 2.9 percent on Friday.

The broader 50-share NSE index was trading down 1.2 percent at 4,980.45 points.

There were 1.3 losers for every gainer in the broader market with 264.3 million shares changing hands.

Wall Street stocks had fallen 2 percent on Friday after data showing zero jobs growth in August brought investors face-to-face with the prospect of another recession. The euro slipped to a three weak low against the dollar.

The MSCI’s measure of Asian markets other than Japan was down 2.97 percent, Japan’s Nikkei dropped 1.86 percent and South Korea’s Kospi was trading lower by 4.39 percent.

Stocks on the move

• OnMobile Global Ltd rose almost 3 percent after its board approved a buyback of shares for an amount not exceeding 250 million rupees.

• Provogue India rose more than 3 percent after its board approved spinning off its real estate division.

Top three by volume

• Unitech at 8.62 million shares

• Suzlon Energy at 8.57 million shares

• Reliance Communications at 5.59 million shares.

Reuters