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Maruti Suzuki Decline Leads India's Sensex Index's First Drop in Four Days
India’s stocks fell for the first time in four days. Maruti Suzuki India Ltd. led the slide after its quarterly profit missed analysts’ estimates.
Maruti, the nation’s biggest carmaker, declined the most ever after its net income fell for the first time in five quarters as increased raw material costs eroded gains from higher vehicle sales. State Bank of India Ltd., the nation’s biggest lender, dropped the most in more than two months. India’s central bank is likely to raise borrowing costs tomorrow to curb inflation.
“The days of easy money have ended,” said Gopal Agrawal, head of equities at the local office of Mirae Asset Financial Group in Mumbai, which has $2.5 billion invested in India. “Everyone is mentally prepared for a rate hike; only the quantum remains to be seen. We are not seeing the earnings upgrades. Our approach is more stock-specific now.”
The Bombay Stock Exchange’s Sensitive Index, or Sensex, declined 110.93, or 0.6 percent, to 18,020.05. The S&P CNX Nifty Index on the National Stock Exchange lost 0.6 percent to 5,418.60. The BSE 200 Index retreated 0.6 percent to 2,291.32.
Maruti plunged 12 percent to 1,191.45 rupees, its steepest one-day loss since it began trading in July 2003. First-quarter profit fell 20 percent from a year earlier to 4.65 billion rupees ($99.1 million), the unit of Suzuki Motor Corp. said July 24. The average estimate of 24 analysts surveyed by Bloomberg was for 6.7 billion rupees.
Rating Cut
Jamshed Dadabhoy and Arvind Sharma, analysts at Citigroup Inc., cut Maruti to “hold” from “buy,” citing “earnings headwinds.” Kapil Singh, an analyst at Nomura Holdings Inc., lowered it to “reduce” from “buy.”
Hero Honda Motors Ltd., India biggest motorcycle maker, plunged 7.5 percent to 1,804.3 rupees, its biggest one-day loss since May 19, 2009. Tata Motors Ltd., the largest truckmaker, lost 2.1 percent to 821.2 rupees.
India’s central bank is likely to raise interest rates for the fourth time since March at a policy meeting tomorrow. The reverse repurchase rate will be increased by a quarter- percentage point to 4.25 percent, all 20 estimates in a Bloomberg News survey showed. It will raise the repurchase rate to 5.75 percent from 5.5 percent, according to all but one of the economist, who expects it to be kept unchanged.
State Bank tumbled 3.5 percent to 2,410.15 rupees, its biggest decline since May 14. Housing Development Finance Corp., the largest mortgage lender, dropped 1.2 percent to 2,958.55 rupees. DLF Ltd., the No. 1 developer, sank 2.9 percent to 313.1 rupees.
“The mood is extremely cautious among traders and investors,” said Kishor Ostwal, managing director of CNI Research (India) Ltd., a publicly traded equities research provider in Mumbai. “Some of the results have been below expectations and there is a good chance of an interest rate increase at the policy meeting tomorrow.”
Overseas funds bought a net 1.88 billion rupees of Indian equities on July 22, raising total investments in the stocks this year to 412 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:
Brigade Enterprises Ltd. (BRGD IN), a real estate developer, rose 1.8 percent to 137.85 rupees after reporting first-quarter profit jumped nearly fourfold to 139.2 million rupees.
Indian Bank (INBK IN), a state-owned lender, sank 12 percent to 221.75 rupees after reporting that gross non- performing assets almost doubled to 9.88 billion rupees in the three months ended June 30 from a year earlier.
Indian Oil Corp. (IOCL IN), the nation’s biggest state- owned refiner, decreased 2.3 percent to 364.65 rupees. The company posted a loss of 33.9 billion rupees in the quarter ended in June, compared with a profit of 36.8 billion rupees a year earlier.
Jaiprakash Associates Ltd. (JPA IN) sank 5.8 percent to 121.2 rupees, its biggest drop since November, after interest and excluding one-off items dropped 22 percent to 2.1 billion rupees in its first quarter through June 30.
3M India Ltd. (3M IN), a maker of electronics and office products, advanced 3.6 percent to 2,969.8 rupees, its highest since at least 1991, after saying quarterly net income almost doubled to 318.5 million rupees from a year earlier.
To contact the reporter on this story: Rajhkumar K Shaaw in Mumbai at rshaaw@bloomberg.net.
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