India's Sensex Index Completes First Weekly Drop in Three; Infosys Falls

Indian stocks fell, with the benchmark index declining for the first time in three weeks. Infosys Technologies Ltd. dropped as the central bank said the country has become more vulnerable to global markets.

Software exporter Infosys retreated for a fourth day after the Reserve Bank of India said yesterday foreign trade plays a bigger role in the economy, exposing the country to slowdowns and financial crises. Sterlite Industries (India) Ltd., the biggest copper and zinc producer, lost 2.1 percent.

“Investors can hold cash for now and wait for a correction,” said R.K. Gupta, portfolio manager and managing director at Taurus Asset Management in New Delhi. “If at all, they can bet on the domestic growth story.” Gupta declined to name specific stocks.

The Bombay Stock Exchange’s Sensitive Index, or Sensex, fell 48.38, or 0.3 percent, to 17,460.95. The gauge declined 0.7 percent this week, after gaining the previous two. The S&P CNX Nifty Index on the National Stock Exchange lost 0.3 percent to 5,237.10. The BSE 200 Index retreated 0.3 percent to 2,223.59.

Infosys, the second-largest software services exporter that gets almost all of its sales abroad, slid 1.4 percent to 2,727.5 rupees. Sterlite, the biggest copper producer that derives about a third of its revenue outside of India, fell 2.1 percent to 160.7 rupees.

“The shift in the composition of aggregate demand towards exports during the current decade has made the Indian economy more susceptible to global developments,” the Reserve Bank of India’s research department said yesterday.

Trade, GDP

Trade represented 35 percent of gross domestic product for the year to March 31, 2008, up from 21 percent a decade earlier, according to the central bank.

Hindustan Petroleum Corp., the third-biggest state-run refiner, rose 1.1 to 475.2 rupees, its highest level since 1994. The shares have soared 35 percent in the six trading sessions since the government freed gasoline and other fuel prices.

India’s state refiners will decide on a pricing mechanism for gasoline in two to three weeks, Oil Secretary S. Sundareshan said in Bangalore today.

Bharat Petroleum Corp. gained 1 percent to 666.75 rupees, the highest in almost 16 years. India’s No. 2 state refiner today said it began production at a 6 million metric ton-a-year crude distillation unit on June 29.

Overseas funds sold a net 1.76 billion rupees ($37.9 million) of Indian equities on June 29, paring their investments in the stocks this year to 310.8 billion rupees, according to the nation’s market regulator.

Inflows from overseas reached a record 834.2 billion rupees in 2009, exceeding the high set two years ago in local currency terms, as the biggest advance in 18 years lured foreign funds. They sold a record 529.9 billion rupees of shares in 2008, triggering a record annual decline.

The following were among the most active on the exchange:

Monnet Ispat & Energy Ltd. (MISP IN), a sponge-iron maker, jumped 16 percent to 468.45 rupees, its highest level since September 2008, after Blackstone Group LP, the world’s biggest private-equity firm, said it will buy a stake in its power unit.

NIIT Ltd. (NIIT IN) climbed 3.3 percent to 65.75 rupees. The software company was raised to “buy” from “sell” by Citigroup Inc. analysts Vishal Agarwal and Surendra Goyal, who cited the stock’s “reasonable valuations” and improving operating metrics. The analysts raised their share-price estimate to 85 rupees from 50 rupees.

Persistent Systems Ltd. (PSYS IN) soared 10 percent to 474.55 rupees. The software company was rated “outperform” in new coverage by Credit Suisse Group AG analysts led by Sunil Tirumalai, who said the stock should trade at a premium to its peers given its growth and margin profile. The analysts have a share-price estimate of 540 rupees.

To contact the reporter on this story: Rajhkumar K Shaaw in Mumbai at rshaaw@bloomberg.net.

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