By Sethuraman NR
BENGALURU, Sept 23 (Reuters) – Indian shares dropped on Friday, as investors kept off risky assets on global economic growth concerns, while financial stocks slid after the central bank barred Mahindra Group’s financial services arm from using third-party agents to recover loans.
The NSE Nifty 50 index .NSEI: fell 1% at 17,440 at 0502 GMT, while the S&P BSE Sensex .BSESN: dropped 1% to 58,537.
The US Federal Reserve’s members’ projections for aggressive hikes and persistently high rates over the next year or so, unleashed another round of dollar buying that put other assets on the run.
The Nifty bank index .NSEBANK and the financial index .NIFTYFIN dropped 1.9%, each.
Shares of Mahindra and Mahindra Financial Services MMFS.NS: fell more than 14% after the Reserve Bank of India directed the company to stop using third-party services for loan recovery until further orders.
“This move (by RBI) will be seen as negative for the stock as well as the companies lending for vehicles. It will reduce the collection efficiencies for these companies,” said AK Prabhakar, head of research at IDBI Capital.
Asian stocks limped towards a fourth straight weekly decline on Friday and bonds nursed big losses, as investors scrambled to catch up with the US Federal Reserve’s interest rate outlook. MKTS/GLOB
“Because of the Fed’s move, a lot of money that was coming to emerging markets will head back,” said Saurabh Jain, assistant vice-president, research, at SMC Global Securities.
Foreign investors net sold $152 million worth of Indian equities this week as of Thursday, after buying net $819 million worth last week, Refinitiv Eikon data showed.
The Nifty bank index has gained about 19% so far this quarter and had hit a life high last week on expectations of higher credit growth.
“Banks are seeing some correction after outperforming other sectors,” said Jain, adding that there was no serious threat to growth in banks despite a difficult macro environment.
Tata Steel TISC.NS: rose 1.5% and was top Nifty 50 gainer, after it approved the merger of metal units with the company.
(Reporting by Nallur Sethuraman and Gaurav Dogra in Bengaluru; Editing by Savio D’Souza and Neha Arora)
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