Mumbai: Indian stocks tumbled, with the benchmark index falling to its lowest level this year, after block deals in index futures and foreign funds extended the longest sell-off in local shares this year.

Bharat Heavy Electricals Ltd, the top power-equipment maker, was the biggest loser on the S&P BSE Sensex, while NTPC Ltd, the largest utility, fell the most in eight weeks. ICICI Bank Ltd slid to a three-month low, sending a gauge of lenders its sharpest loss since April 27. The yield on sovereign bonds due 2024 climbed to a four-month high and the rupee weakened.

The Sensex plunged 2.6 per cent to 26,717.37, the lowest close since December 17. The gauge briefly extended losses to more than 10 per cent from its Jan. 29 record, meeting the definition of correction, as more investors seek more evidence that the government’s efforts to bolster growth will lead to a revival in company profits. Foreigners sold $475 million of shares on Thursday and Monday, and have been sellers of CNX Nifty futures since April 23.

“Investor sentiment is weak due to inaction on crucial government legislations,” Deven Choksey, managing director of K.R. Choksey Shares & Securities Ltd, said by email. “One of the important reasons for the fall could be that foreigners are selling to invest in China IPOs.”

Twenty-five companies are scheduled to sell initial share offerings from yesterday through May 11, which may freeze 2.34 trillion yuan ($376 billion), according to data compiled by Bloomberg. The China Securities Regulatory Commission said last month it would increase the pace of IPOs.

GST bill

Lawmakers in the lower house of parliament voted today to amend the constitution to allow for a national sales tax, a step toward creating a unified market for commerce. The bill must now be approved by the upper house, where Prime Minister Narendra Modi’s government lacks a majority. Modi has used a temporary executive order on easing land purchases by companies to pressure lawmakers into approving the legislation that has been blocked in parliament.

A rebound in oil prices also raised concern over inflation and the central bank’s ability to cut interest rates, Choksey said. Brent surged 21 per cent in April, following a 49 per cent rout in the year ended March that helped slow retail inflation and prompted the Reserve Bank to lower interest costs.

The CNX Nifty Index tumbled 2.7 per cent to 8,097, closing below the 200-day average for a second time in six days. As many as 38,899 May futures contracts worth $126 million were traded at 9:40am. There were two other deals involving more than 12,000 contracts each, data compiled by Bloomberg show.

“The Nifty broke its 200-day average convincingly for the first time, which is a bearish sign,” Arjun Prajapati, deputy vice president at Asit Mehta Investment Intermediaries Ltd, said by phone.

The Sensex has dropped 2.8 per cent this year and trades at 14.8 times projected 12-month earnings, the cheapest since December. The MSCI Emerging Markets Index is valued at 12.5 times, data compiled by Bloomberg show.