Sensex extends last week’s retreat; rupee weakens
May 02 2016 08:02 PM
The Bombay Stock Exchange. The Sensex lost 0.7% to 25,436.97 at the close yesterday.


Indian stocks declined, extending last week’s retreat, as a selloff in Asian stocks sapped demand for riskier assets.
Bharti Airtel, India’s largest mobile-phone operator, slid for a third day. ICICI Bank, the country’s biggest private lender, was the top loser on the S&P BSE Sensex. ITC declined to a one-week low. Dr Reddy’s Laboratories and Adani Ports & Special Economic Zone fell more than 2% each.
The Sensex lost 0.7% to 25,436.97 at the close in Mumbai. The gauge has risen 11% from a February low as the risk-on sentiment returned to Asia. Foreigners bought $588mn of local shares last month, adding to March’s inflow of $4.1bn, which was the most in three years. The yen soared almost 5% on the final two trading days in April as the Bank of Japan unexpectedly refrained from boosting stimulus amid fading prospects for a US interest-rate increase in June or July.
“It’s the reversal of the yen-carry trade happening because of what Bank of Japan did,” Mehraboon Irani, head of private-client group at Nirmal Bang Securities, said in an interview with Bloomberg TV India. About “75% of the rise which Indian markets saw was due to global factors. If there’s a little bit of global uncertainty, there is a distinct possibility we may fall off. However, India remains a buy on dips market.” While a weakening dollar helped boost commodity prices in April by the most since 2010, the global stocks’ rebound from a three-year low in February is stumbling as economic data and corporate earnings do little to lift investor sentiment. US consumer spending rose less than economists forecast in March, data showed on Friday, wrapping up the weakest quarter in a year for the biggest part of the nation’s economy.
Locally, investors are focused on the ongoing quarterly earnings season to look for signs of economic growth filtering through to company bottom lines. Profits have dropped in four of the past five quarters in the worst run since the global financial crisis. So far in this reporting season, six out of 10 Sensex companies that have reported March-quarter results beat or matched analyst estimates.
Bharti Airtel declined 1.6% to its lowest level since April 22. ITC dropped 1.2%. Dr Reddy’s Laboratories tumbled 2.5%, the most since March 29. Adani Ports retreated 2.2%.
ICICI Bank plunged 4.3%, extending last week’s 6% slide. On Friday, the lender said its fourth-quarter profit sank 75% to Rs7bn ($105mn) as it set aside Rs36bn as buffer for possible defaults. Foreign investors bought $36mn of local stocks on April 28, taking this year’s inflows to $1.8bn. The Sensex has retreated 2.6% this year and trades at 15.6 times 12-month projected earnings versus 11.7 for the MSCI Emerging Markets Index.
Meanwhile, in line with equities, the rupee yesterday fell by 11 paise to close at 66.44 on fresh demand for the US currency from banks and importers despite weaker dollar in the overseas market.

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