Bloomberg/Mumbai
Indian stocks fell for the second day, with the benchmark index retreating to a five-week low, as property developers and power utilities declined. NTPC, the country’s biggest generator, tumbled the most in a year. Housing Development & Infrastructure was the worst performer on a gauge of real-estate companies. Tata Motors, owner of Jaguar Land Rover, slid for a third day, while Hindustan Unilever Ltd, the biggest home-products maker, decreased to a three-week low.
The S&P BSE Sensex dropped 0.7% to 28,261.08 at the close, the lowest level since February 9. The gauge has fallen 5.9% from its March 4 peak as earnings per share for the 30 Sensex companies declined in the December quarter for the first time since the three months ended June 2013, according to data compiled by Bloomberg. The measure is valued at 15.9 times its projected 12-month profits, higher than its three-year average of 14.1, the data show.
“The expansion in price-earnings ratio hasn’t been backed by growth in earnings,” Ajay Srivastava, managing director of Dimensions Consulting, said in an interview to Bloomberg TV India today. “It’s clear that the earnings season for March will be a wash out, and that the economic recovery everyone was anticipating has been pushed back to 2016 or 2017. That’s why every rally is being sold into.”
Indian stocks fell in the final hour of trading yesterday after jumping as much as 1.3% in the wake of the US Federal Reserve’s move to cool the outlook for interest-rate increases. Data last week showed retail inflation accelerated more than estimated and factory output rose, while wholesale prices slowed more than forecast, complicating central bank Governor Raghuram Rajan’s next move after two unscheduled interest-rate cuts this year.
NTPC plunged 6%, the most since February 24, 2014, and the worst performance on the Sensex. There are “few triggers to reverse the recent derating” of the shares, UBS Securities India said in an investor note dated yesterday.
Tata Motors slid 1.1%, paring this year’s gains to 11%. Hindustan Unilever lost the most since January 19. A gauge of consumer companies to its third day of losses.
Housing Development & Infrastructure plunged 8.7%, the most in six months. The S&P BSE India Realty Index, which plunged 3.7%, the steepest drop since December 16. Unitech slumped 7.5%, the most since February 5.
Global investors bought a net $238.5mn of shares on March 19, taking the year’s inflows to $5.5bn, the most among eight Asian markets tracked by Bloomberg.
The Sensex has gained 2.8% this year and trades at 15.8 times projected 12-month earnings, compared with the MSCI Emerging Markets Index’s multiple of 11.8.
Meanwhile the rupee yesterday strengthened against the dollar, even as Asian currencies weakened. According to currency dealers, there was a considerable dollar flow in the market and nationalised banks were seen buying dollars, most probably on behalf of the Reserve Bank of India to boost reserves.
The rupee ended at 62.47 per dollar, up 0.08% from its previous close. The currency opened at 62.52 per dollar and touched a high and a low of 62.42 and 62.59, respectively, in intra-day trade.
