BLBG: India Stocks Fall, Led by Mahindra, on Monsoon Rainfall Concern
July 21 (Bloomberg) -- India’s benchmark stock index fell after the government said it’s “worried” about below average monsoon rainfall because of the effect on farm output accounting for one-fifth of the economy.
Mahindra & Mahindra Ltd., the country’s largest maker of tractors, lost 2.2 percent after Agriculture Minister Sharad Pawar told parliament late yesterday “the situation is serious” in the key northwest region. Jaiprakash Associates Ltd., the biggest maker of dams, dropped 2 percent. India is the world’s second-biggest producer of rice, wheat and sugar.
“With each passing day, the monsoon concern is becoming bigger,” said R.K. Gupta, who helps oversee the equivalent of $128 million at Taurus Asset Management Ltd. in New Delhi. “The markets are looking a bit overbought, we are seeing some profit booking.”
The Bombay Stock Exchange’s Sensitive Index, or Sensex, fell 64.72, or 0.4 percent, to 15,126.29 at 11 a.m. in Mumbai, leaving the gauge 57 percent higher this year. The S&P CNX Nifty Index on the National Stock Exchange lost 0.3 percent to 4,488.25. The BSE 200 Index declined 0.2 percent to 1,845.14.
Mahindra lost 2.2 percent to 780.40 rupees. Jaiprakash declined 2 percent to 218.85 rupees. Hero Honda Motors Ltd., India biggest motorcycle maker, fell 1.1 percent to 1,634 rupees. Tata Motors Ltd., the maker of the world’s cheapest car, the Nano, slid 0.5 percent to 326.40 rupees.
Deficient rains have caused acreage of all major crops to lag year-earlier levels, denting prospects for bigger harvests of rice, oilseeds and sugar cane. Agriculture makes up about 20 percent of the Indian economy, according to IIFL Ltd. in Mumbai.
Farm Output
Prime Minister Manmohan Singh is relying on an increase in farm output to push economic growth back to a 9 percent pace and to meet a poll promise of ensuring food security for poor families.
Rains have been 43 percent below normal in the northwest region, the nation’s grain bowl, from June 1 to July 15, the weather bureau said last week. The region includes the biggest grain-growing states of Uttar Pradesh, Punjab and Haryana.
Sowing of monsoon crops begins in June and ends mostly by July. Harvesting starts in September.
To contact the reporters on this story: Cherian Thomas in New Delhi at Cthomas1@bloomberg.net; Rajhkumar K Shaaw in Mumbai at rshaaw@bloomberg.net.
