Indian stocks headed for the lowest
level in seven weeks as concerns over slowing company earnings
countered speculation U.S. and European central banks may take
fresh stimulus steps.
ITC Ltd. (ITC), which has the biggest weighting on the BSE India Sensitive Index (SENSEX), declined after first-quarter revenue trailed estimates. Infosys Ltd. (INFY), the second-biggest software exporter, bound for the lowest level in more than 2 1/2 years. ICICI Bank Ltd. (ICICIBC) paced losses among its peers. The Sensex dropped 1 percent to 16,763.24 at 2:36 p.m. in Mumbai, bound for its lowest close since June 6.
As many as 43 percent of companies on the Sensex that have posted June-quarter earnings have missed analyst estimates as elevated interest costs and policy paralysis in the ruling coalition slowed economic growth to a near-decade low even as and the crisis in Europe crimped exports. The European Union is India’s largest trading partner.
“Some earnings have been disappointing and the inaction on policy reforms is keeping sentiments subdued,” said Rikesh Parikh, vice president of equities at Motilal Oswal Securities Ltd. in Mumbai. “High interest costs and weak demand seem to have reduced revenues.”
Six out of 14 companies in the Sensex have missed earnings estimates, compared with 30 percent that trailed forecasts in the quarter ended March, and 47 percent three months earlier, data compiled by Bloomberg show.
Prime Minister Manmohan Singh, who took control of the finance ministry in June, has pledged to revive an economic reforms agenda stymied by opposition from his own allies. The government last year suspended a plan to allow Wal-Mart Stores Inc. (WMT) and other foreign companies to open supermarkets, while an anti-corruption bill and proposals to allow foreign investment in aviation and pensions are also stalled.
“Everything’s not perfect and we would like to see more by way of government policy, more in terms of specifics as opposed to rhetoric,” Jeff Chowdhry, head of emerging-market equities at U.K.-based F&C Asset Management Plc (FCAM), told Bloomberg UTV today. “The market at the moment is narrow and based on companies which are delivering independent of the government policy rather than with the help of it.”
Infosys lost 1.3 percent to 2,141.7 rupees, bound for its lowest close since Nov. 3, 2009. ICICI Bank dropped 1.6 percent to 903 rupees. State Bank of India, the largest lender, slid 2.5 percent to 2,018.95, heading for a two-month low. HDFC Bank retreated 2 percent to 564.3 rupees, a one-month low.
ITC, which has a 9.7 percent weighting in the Sensex, fell 2.2 percent to 2,459.3 rupees. Revenue of 66.5 billion rupees were lower than the 66.8 billion rupees estimate in a Bloomberg News survey. Net income rose 20 percent to 16 billion rupees in the three months ended June, beating the 15.8 billion-rupee median of 24 analysts’ estimates.
Sterlite Industries Ltd. (STLT) lost 3.6 percent to 96.75 rupees. The company’s profit may fall to 11.5 billion rupees, compared with 16.4 billion rupees a year ago, according to the median of 26 analyst estimates. Earnings are due later today.
India VIX, which measures the cost of protection against losses in the S&P CNX Nifty (NIFTY) Index, fell 1.1 percent to 16.94. The Nifty index dropped 1.5 percent to 5,077.50 and its August futures traded at 5,104.95. The BSE-200 Index decreased 1.5 percent. Combined volume on the nation’s top two bourses was 768 million shares yesterday, 15 percent less than the 12-month daily average of 899 million shares.
The Sensex has gained 8 percent this year, partly because of record purchases by overseas investors, who have bought a net $10.2 billion in local equities since Jan. 1, the highest in Asia and a record for the period. The stock gauge trades at 13.2 times estimated earnings, compared with the MSCI Emerging Markets Index’s 10 times.
Overseas investors sold a net 2.11 billion rupees of local stocks on July 24, the first sales in 18 days, data from the market regulator show.
ITC Ltd. (ITC), which has the biggest weighting on the BSE India Sensitive Index (SENSEX), declined after first-quarter revenue trailed estimates. Infosys Ltd. (INFY), the second-biggest software exporter, bound for the lowest level in more than 2 1/2 years. ICICI Bank Ltd. (ICICIBC) paced losses among its peers. The Sensex dropped 1 percent to 16,763.24 at 2:36 p.m. in Mumbai, bound for its lowest close since June 6.
As many as 43 percent of companies on the Sensex that have posted June-quarter earnings have missed analyst estimates as elevated interest costs and policy paralysis in the ruling coalition slowed economic growth to a near-decade low even as and the crisis in Europe crimped exports. The European Union is India’s largest trading partner.
“Some earnings have been disappointing and the inaction on policy reforms is keeping sentiments subdued,” said Rikesh Parikh, vice president of equities at Motilal Oswal Securities Ltd. in Mumbai. “High interest costs and weak demand seem to have reduced revenues.”
Six out of 14 companies in the Sensex have missed earnings estimates, compared with 30 percent that trailed forecasts in the quarter ended March, and 47 percent three months earlier, data compiled by Bloomberg show.
Prime Minister Manmohan Singh, who took control of the finance ministry in June, has pledged to revive an economic reforms agenda stymied by opposition from his own allies. The government last year suspended a plan to allow Wal-Mart Stores Inc. (WMT) and other foreign companies to open supermarkets, while an anti-corruption bill and proposals to allow foreign investment in aviation and pensions are also stalled.
‘Rhetoric’
Investors also expect Singh to raise diesel prices for the first time in a year, a move that would help state-run refiners that sell fuels at below-market rates. Indian Oil Corp. (IOCL), Bharat Petroleum Corp. (BPCL) and Hindustan Petroleum Corp. (HPCL) lose 3.6 billion rupees ($64 million) a day on fuel sales, government data show, and rely on subsidies and discounted crude purchases from state explorers to recover losses.“Everything’s not perfect and we would like to see more by way of government policy, more in terms of specifics as opposed to rhetoric,” Jeff Chowdhry, head of emerging-market equities at U.K.-based F&C Asset Management Plc (FCAM), told Bloomberg UTV today. “The market at the moment is narrow and based on companies which are delivering independent of the government policy rather than with the help of it.”
Growth Measures
Asian stocks headed for the first advance in five days after a drop in U.S. new home sales fueled speculation the Federal Reserve may take new steps to spur growth, boosting demand for growth-sensitive shares. European Central Bank council member Ewald Nowotny said there were arguments in favor of giving the European Stability Mechanism a banking license, opening access to ECB lending.Infosys lost 1.3 percent to 2,141.7 rupees, bound for its lowest close since Nov. 3, 2009. ICICI Bank dropped 1.6 percent to 903 rupees. State Bank of India, the largest lender, slid 2.5 percent to 2,018.95, heading for a two-month low. HDFC Bank retreated 2 percent to 564.3 rupees, a one-month low.
ITC, which has a 9.7 percent weighting in the Sensex, fell 2.2 percent to 2,459.3 rupees. Revenue of 66.5 billion rupees were lower than the 66.8 billion rupees estimate in a Bloomberg News survey. Net income rose 20 percent to 16 billion rupees in the three months ended June, beating the 15.8 billion-rupee median of 24 analysts’ estimates.
Land Rover
Tata Motors Ltd. (TTMT), the owner of Jaguar Land Rover, sank 4.2 percent to 204.1 rupees, poised for the lowest price since Jan. 9. Bharat Heavy Electricals Ltd. (BHEL) dropped 2.1 percent to 211.80 rupees. The electric equipment manufacturer said first-quarter profit increased to 9.21 billion rupees, higher than the 8.23 billion rupees estimate in a Bloomberg News survey.Sterlite Industries Ltd. (STLT) lost 3.6 percent to 96.75 rupees. The company’s profit may fall to 11.5 billion rupees, compared with 16.4 billion rupees a year ago, according to the median of 26 analyst estimates. Earnings are due later today.
India VIX, which measures the cost of protection against losses in the S&P CNX Nifty (NIFTY) Index, fell 1.1 percent to 16.94. The Nifty index dropped 1.5 percent to 5,077.50 and its August futures traded at 5,104.95. The BSE-200 Index decreased 1.5 percent. Combined volume on the nation’s top two bourses was 768 million shares yesterday, 15 percent less than the 12-month daily average of 899 million shares.
The Sensex has gained 8 percent this year, partly because of record purchases by overseas investors, who have bought a net $10.2 billion in local equities since Jan. 1, the highest in Asia and a record for the period. The stock gauge trades at 13.2 times estimated earnings, compared with the MSCI Emerging Markets Index’s 10 times.
Overseas investors sold a net 2.11 billion rupees of local stocks on July 24, the first sales in 18 days, data from the market regulator show.
