(Reuters) – Indian shares dropped sharply on Tuesday, after data last week showed the economy grew at its weakest pace in over six years as consumer demand weakened and government spending slowed.
A broker reacts while trading at his computer terminal at a stock brokerage firm in Mumbai, December 11, 2018. REUTERS/Francis Mascarenhas/Files
The broader NSE Nifty was down 1.11% at 10,900.5 as of 0414 GMT, while the benchmark BSE Sensex was 1.07% lower at 36,933.25. Indian markets were closed on Monday for a public holiday.
Meanwhile, stocks in Asia were bruised as the United States began imposing 15% tariffs on a variety of Chinese goods on Sunday as China initiated new duties on U.S. crude.
The Indian economy, the third largest in Asia, expanded just 5% year-on-year in the three months ended June – the lowest pace since March 2013, official data showed on Friday, far below the 5.7% forecast in a Reuters poll, suggesting the economy had lost momentum.
A separate private sector survey indicated that expansion in the country’s manufacturing sector hit its slowest in 15 months in August, as demand and output grew at their weakest pace in a year and cost pressures increased.
Auto stocks were beaten after top automakers reported a slump in August sales over the weekend.
The Nifty Auto index fell as much as 1.7%, with Tata Motors Ltd dropping 4.7% and Mahindra and Mahindra Ltd declining 3%.
The Nifty PSU Bank index, which tracks the country’s state-owned lenders, fell as much as 3.3% after the government announced a series of mergers involving 10 such banks to boost the struggling sector and revive economic growth.
Shares in Punjab National Bank, the biggest lender among the 10, slumped 6.3% to their lowest since Oct. 1.
Meanwhile, the Indian rupee weakened to 72.03 against the dollar, versus its close of 71.41 on Friday.
Reporting by Chris Thomas in Bengaluru; Editing by Rashmi Aich