Oct 17 (Reuters) - Indian shares dropped on Thursday as motorcycle maker Bajaj Auto's warning of weak festival season sales rippled through the industry, adding to the pressure of high stock valuations and the exodus of foreign funds.
The Nifty 50 index dropped 0.6% at 24,814 points as of 10:25 a.m. IST, while the S&P BSE Sensex fell 0.4% to 81,155.
Bajaj Auto slumped 10%, set for its worst day since March 2020, after it said it expects festive season sales growth of just 3% to 5%, well below expectation of at least 8%.
The warning from Bajaj, the first automaker and also major consumer company to report quarterly results, added to worries that high inflation, especially in food prices, has forced consumers to limit more expensive purchases in the festival season.
Auto stocks sank 3%, with Bajaj's bigger two-wheeler rivals Hero MotoCorp and TVS Motor down by about 5% each.
Tyre-makers CEAT, MRF and Apollo Tyres fell 0.4% to 2%, while auto-focussed lender Shriram Finance slipped 1.6%.
Eleven of the 13 major sectors dropped, while the domestically-focussed small-caps and mid-caps down 0.3% and 0.8% respectively.
"Bajaj's outlook has definitely disappointed investors, who already were unhappy with some already underwhelming large-caps earnings," said Abhishek Goenka, founder and CEO of IFA Global.
Added to that, foreign investors have diverted their funds to China, leading to domestic outflows of $8.1 billion so far in October, the highest since March 2020. They were net sellers for the thirteenth straight session on Wednesday.
That has led to questions of how long will domestic investors have to support the markets, Goenka said.
Reports from marquee companies, including Infosys, Axis Bank and Nestle India, later in the day will be in focus.
Meanwhile, Hyundai Motor India's record $3.3 billion initial public offering was subscribed 43% as of 10:23 a.m. IST on its final day of bidding.
Reporting by Hritam Mukherjee in Bengaluru; Editing by Rashmi Aich and Savio D'Souza
Source: Reuters