By Sachin Ravikumar
BENGALURU (Reuters) – A slide in banking shares sent Indian stock indexes tumbling on Monday as the government extended a coronavirus lockdown by two weeks, while rising U.S.-China tensions sapped optimism about a pick up in global economic activity.
India on Friday extended its nationwide coronavirus lockdown for another two weeks after May 4 while easing restrictions in lower-risk zones, but travel, hotels, restaurants, shopping malls and cinema halls remain shut.
The NSE Nifty 50 index <.NSEI> was down 4.69% at 9,397.85 by 0500 GMT, while the S&P BSE Sensex <.BSESN> was 4.73% lower at 32,120.95. India’s equity markets were closed on Friday for a public holiday.
The dour start to May comes after a 14% gain in April for the Nifty, its best month in 11 years, although the index is still down nearly 23% this year as the COVID-19 pandemic hammered markets.
Shares in Reliance Industries <RELI.NS> were down 0.9% on Monday after the country’s most valuable company reported its worst profit slide in 11 years on Thursday and unveiled the nation’s largest rights issue.
On Monday, the oil-to-telecoms conglomerate announced a nearly $750 million investment from U.S. private equity firm Silver Lake.
Shares in Indian lenders HDFC Bank Ltd <HDBK.NS>, Housing Development Finance Corp <HDFC.NS> and ICICI Bank <ICBK.NS> were the top three drags on the Nifty, as the lockdown strains the nation’s financial system. HDFC Bank, the country’s largest private sector lender, fell 6.7%.
“As the lockdown continues, there is a consensus in the market that there would be pressure on the banking system because of the expected rise in delinquency rates,” said Saurabh Jain, assistant vice president of equity research at SMC Global Securities in New Delhi.
Broader Asian shares were also lower, while the safe-haven dollar gained, after U.S. President Donald Trump last week threatened new tariffs on China to retaliate for the spread of the novel coronavirus, putting the brakes on optimism about an economic re-start as countries ease restrictions.
India expects bad debts at its banks – already at about $123 billion currently – could double after the coronavirus crisis brought the economy to a sudden halt, according to government and banking sources, Reuters reported on Sunday.
The shutdown has pummelled India’s economy at a time when growth has already slowed to multi-year lows, depriving millions of day labourers of income and stranding rural migrants in cities where they can no longer afford rent or food.
(Reporting by Sachin Ravikumar; Editing by Aditya Soni)