(Bloomberg) -- Indian equities dropped for a third day as investors waited to see government plans to bolster a slowing economy and arrest a cash crunch.

The benchmark S&P BSE Sensex retreated 0.3% to 39,622.72 as of 10:00 a.m. in Mumbai, set for its longest string of losses in a month while remaining little changed for the week. The NSE Nifty 50 Index also fell 0.3% today.

A nearly 10% rally in India’s key equity indexes so far this year has led some investors to assess whether the gains are too steep too soon. India’s economy is slowing, while a liquidity shortage has triggered debt repayment defaults or delays among some local companies. With a parliamentary session due to begin next week, investors are waiting to see if policies by Prime Minister Narendra Modi’s second-term government can spur growth and ease the cash crunch.

Strategist View

  • “Key challenges for the markets would be news flow on oil, U.S. plan on tariffs and India’s budget plans on how to stimulate investments ahead,” said Avinash Gorakshakar, head of research at Mumbai-based Joindre Capital Services Ltd. “Valuations look expensive, but any correction and stock-specific approach should help investors in making some buy calls,” he said.

The Numbers

  • Thirteen of the 19 sector indexes compiled by BSE Ltd. fell, led by a gauge of property stocks.
  • Twenty-one of the 31 Sensex members and 36 of the 50 Nifty stocks declined.
  • IndusInd Bank Ltd.’s 1.6% drop was the steepest among Sensex members, extending Thursday’s loss after UBS AG cut its rating on the shares to sell. Non-bank lender Indiabulls Housing Finance Ltd. dropped 3.2%, the most among Nifty stocks, a day after a 12% surge.
  • Gruh Finance Ltd. slid 6.3%, the most on the S&P BSE 200 Index, after 4.2% of its equity was traded in blocks. It’s the most-traded stock by volume and value in India today. Its parent, Housing Development Finance Corp., offered to sell 31 million shares of Gruh at 290 rupees apiece, according to terms seen by Bloomberg yesterday. The share-offer price was 1.9% lower than the 3-month average through the June 13 close.

Analyst Notes/Market-Related Stories

  • India Credit Slowdown Is Set to Reverse on Liquidity: Economics
  • Modi’s Suspect GDP Numbers Have Done Real Damage: Andy Mukherjee
  • India’s Sebi Issues New Disclosure Rules for Credit Rating Cos

To contact the reporter on this story: Ameya Karve in Mumbai at akarve@bloomberg.net

To contact the editors responsible for this story: Divya Balji at dbalji1@bloomberg.net, Margo Towie, Kurt Schussler

©2019 Bloomberg L.P.