The Indian stock markets fell more than 1% on Monday, heading towards their biggest daily fall in nearly a month, as blue-chip stocks such as ICICI Bank Ltd declined on risk aversion linked to Greece, while IT stocks such as Infosys Ltd fell on caution ahead of quarterly earnings.
Asian stocks hit a six-month trough and the euro stumbled on Monday after a Greek vote against austerity measures endangered its future in the single currency and raised the risk of a full-blown crisis in the euro zone.
IT firms' earnings are expected to be soft amid profit warnings by companies such as Tech Mahindra, Persistent Systems, due to client-specific and cross-currency issues.
"We have been saying for months now, India has nothing to worry about, this is a European problem," said G Chokkalingam, founder of Equinomics, a Mumbai-based research and fund advisory firm.
Chokkalingam said he expects to see only a marginal improvement in corporate earnings for the quarter ended June.
The 30-share BSE Sensex was down 0.4% after earlier falling as much as 1.1% and the 50-share Nifty was trading 0.3 percent lower, heading towards their biggest intra-day declines since June 11.
Blue-chips stocks led the decline. ICICI Bank fell 1.2%, while Tata Motors lost 1.8%.
IT stocks also fell. Infosys shed 1%, while Tech Mahindra fell 1.6%.
European stock markets slid at the start of trading on Monday after eurozone member Greece rejected creditors' austerity demands in a weekend referendum.
Frankfurt's DAX 30 shed 2.11% to 10,825.06 points and the CAC 40 in Paris fell 2.06% to 4,709.01 points. Outside the eurozone, the FTSE 100 index lost 1.07% to stand at 6,515.67 compared with Friday's close.
The vote result has fuelled fears the country will crash out of the eurozone, but the euro rallied after Finance Minister Yannis Varoufakis announced his shock resignation.
While the referendum was a victory for the government, Varoufakis suggested he could be an impediment to future debt talks.
"Fear of the unknown, following the decisive Greek rejection of austerity, has seen global stock markets drop -- however the freefall that was predicted has not materialised," said Rebecca O'Keeffe, head of investment at stockbroker Interactive Investor.
"The relatively subdued reaction from the equity and bond markets belies the difficult position that European leaders find themselves in. Any significant compromise by Europe towards Greek debt forgiveness runs the risk of causing a dramatic change in European politics if extreme left-wing parties in Spain and beyond choose to follow Syriza's tactics.
"However, holding firm on their existing policy stance threatens to see Greek banks run out of money within days which would send Greece over the edge," O'Keeffe added.
Greek voters overwhelmingly rejected international creditors' tough bailout terms Sunday, but premier and Syriza leader Alexis Tsipras insisted the result does not mean a "rupture" with Europe despite fears it will end in a "Grexit" from the eurozone.
Source - hindustan
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