Aug. 19 (Bloomberg) -- India’s benchmark stock index fell after the nation’s agriculture minister said farm output may decline because of low monsoon rains. Metal producers declined after their Chinese counterparts plunged.
Mahindra & Mahindra Ltd., India’s largest tractor maker, sank 3.7 percent after Farm Minister Sharad Pawar today said monsoon-sown rice production may decline by 10 million metric tons this year as a result of drought in a third of the country’s 626 districts. Tata Steel Ltd., the biggest producer of the alloy, slid 4 percent.
“There is uncertainty in the minds of investors how the government will overcome the drought situation,” said A.N. Sridhar, a fund manager at Sahara Asset Management Co. in Mumbai. “The rally in commodities seems to have come off as there is uncertainty over demand in China.”
The Bombay Stock Exchange’s Sensitive Index, or Sensex, fell 225.62, or 1.5 percent, to 14,809.64. The measure has lost 5.5 percent this month on concern monsoon rainfall will be deficient. The S&P CNX Nifty Index on the National Stock Exchange lost 1.5 percent to 4,394.1. The BSE 200 Index declined 1.6 percent to 1,815.11.
Mahindra lost 3.7 percent to 740.15 rupees. Jaiprakash Associates Ltd., the nation’s biggest maker of dams, slid 2.7 percent to 206.7 rupees.
Hero Honda Motors Ltd., the nation’s biggest motorcycle maker, lost 2.3 percent to 1,359.2 rupees on concern that the weak monsoon will slash spending in agricultural regions. Forty percent of Hero Honda’s sales come from rural demand.
Farm Output
ACC Ltd., India’s biggest cement maker, lost 5.2 percent to 756.3 rupees. Reliance Communications Ltd., India’s second- largest mobile-phone services operator, lost 4.6 percent to 240.2 rupees.
The monsoon season, which brings about three-quarters of India’s annual rainfall, may be the driest in seven years, the weather bureau said last week, hurting farm output in the world’s second-biggest producer of rice, sugar and wheat.
Rain in the June-September season will be 87 percent of the 50-year average, compared with 93 percent forecast in June, the India Meteorological Department said last week.
Production of oilseeds and sugar cane may also drop, Pawar said, without providing a forecast. Monsoon-sown oilseeds were planted in 15.2 million hectares compared with 16.4 million hectares a year earlier, the farm ministry said.
The government will extend a 15 rupees-a-liter subsidy on imported edible oils until March 2010, Pawar said.
China Stocks
Tata Steel lost 4 percent to 433.75 rupees. Hindalco Industries Ltd., the biggest aluminum producer, slid 3.6 percent to 102.7 rupees. Sterlite Industries (India) Ltd., the nation’s biggest copper producer, declined 1.4 percent to 610.2 rupees.
China’s stocks tumbled, briefly driving the benchmark index into a so-called bear market, on concern economic growth will falter as banks rein in lending.
The Shanghai Composite Index lost 4.3 percent to 2,785.58. The gauge has slumped 19.8 percent since Aug. 4, after more than doubling from November as China rolled out a 4 trillion yuan ($585 billion) stimulus package.
A measure of Chinese metals and materials producers dropped 6.6 percent, the worst performer among 10 industry groups on the CSI 300 Index that covers the Shanghai and Shenzhen markets.
Overseas funds sold a net 9.74 billion rupees ($200.1 million) of Indian stocks on Aug. 17, the Securities & Exchange Board of India said on its Web site. The funds have bought 366.3 billion rupees of Indian stocks this year, compared with record net sales of 530 billion rupees for the whole of 2008.
The following stocks were among the most active on the exchange:
Glenmark Pharmaceuticals Ltd. (GNP IN) plunged 15 percent to 223.25 rupees. The Indian pharmaceutical company fell the most in six months after saying its drug for lung disease wasn’t effective in a patient study.
Maruti Suzuki India Ltd. (MSIL IN) climbed 0.1 percent to 1,301.85 rupees. The maker of half the cars sold in India was raised to “buy” from “hold” at Citigroup Inc., which said the company is best positioned to benefit from a recovery in urban consumption.
Reliance Industries Ltd. (RIL IN) lost 2.9 percent to 1,885.85 rupees. India’s most valuable company is looking to sell a stake of as much in 15 percent in the Rewas port project, Mint reported, citing two people briefed on the matter. Reliance needs to sell the stake both to fund the project and to bring in specialists because it does not have expertise in handling cargo such as containers, according to the report.
Unitech Ltd. (UT IN) fell 3.2 percent to 82.5 rupees. The nation’s second-biggest real estate developer said its telecom unit, Unitech Wireless Ltd., has got a 50 billion rupee-loan from State Bank of India.
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