Reliance Industries Declines on Growth Outlook; India's Sensex Index Falls
July 28 (Bloomberg) -- Vikas Pershad, chief executive officer of Chicago-based Veda Investments LLC, talks with Bloomberg's Susan Li about the outlook for Indian stocks. Pershad, speaking from Chicago, also discusses India's economy and central bank monetary policy. (Source: Bloomberg)
India’s benchmark stock index fell the most in three weeks. Reliance Industries Ltd., the nation’s most valuable company, led the decline as investors speculated its quarterly profit growth will slow amid delays in increasing natural gas output.
Reliance Industries lost 3.1 percent, the most in almost two months. Higher gas output from the largest Indian field may be behind schedule, two people with knowledge of the plan said yesterday, when the company posted growth in its first-quarter net income of 32 percent from a year earlier.
“The year-on-year result of Reliance has met expectations, but for quarter-on-quarter it has slightly disappointed,” said Alex Mathews, head of research at Geojit BNP Paribas Financial Services Ltd. in Kochi.
The Bombay Stock Exchange’s Sensitive Index, or Sensex, fell 120.24, or 0.7 percent, to 17,957.37, its steepest decline since July 7. The S&P CNX Nifty Index on the National Stock Exchange lost 0.6 percent to 5,397.55. The BSE 200 Index dropped 0.4 percent to 2,287.41.
Reliance Industries dropped 3.1 percent to 1,021.25 rupees, its biggest drop since June 1. The company expects to increase output by 33 percent to 80 million cubic meters a day at India’s largest gas field as late as 2012, the people said, at least two years behind schedule.
Mahindra
Quarterly profit through June expanded 3 percent from the previous three months as Reliance failed to increase gas production, said Deven Choksey, chief executive officer at K.R. Choksey Shares & Securities Pvt. in Mumbai.
Mahindra & Mahindra Ltd., India’s biggest tractor maker, climbed 1.3 percent to 648.05 rupees, its highest close since at least 1991. Quarterly profit rose 40 percent to 5.62 million rupees, it said in a filing to the stock exchange. Separately, Mahindra will roll out its cheapest model in more parts of the country as farmers switch to machines from oxen, Bishwambhar Mishra head of the company’s Swaraj tractor unit, said in a phone interview yesterday from Chandigarh, India.
The Sensex may rise 16 percent by March 30 as the nation’s economy expands, according to Veda Investments LLC. The gauge is likely to reach 21,000 by the end of the financial year as the economy may expand by more than 9 percent, more than the central bank’s forecast 8.5 percent pace, Vikas Pershad, chief executive officer of Veda Investments , said today in a Bloomberg Television interview.
Demand
The central bank yesterday raised its forecast for economic growth as a strengthening domestic demand trumps concern that the global economy will slow amid Europe’s debt crisis and elevated U.S. unemployment.
Overseas funds bought a net 4.73 billion rupees ($100.8 million) of Indian equities on July 26, raising total investments in the stocks this year to 425.2 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:
Aban Offshore Ltd. (ABAN IN) soared 8.8 percent to 897.95 rupees. India’s largest oil rig company received 97 percent of an insurance claim on the sinking of its semi-submersible rig ‘Aban Pearl,’ which had an assessed insurance value of $235 million, according to a statement on the Bombay Stock Exchange today.
GMM Pfaudler Ltd. (GMM IN) sank 7.1 percent to 114.45 rupees. The maker of glass-lined reactors for the pharmaceutical industry reported net income declined 26 percent to 19.1 million rupees ($409,366) in the three months through June.
J.K. Lakshmi Cement Ltd. (JKLC IN) sank 7.6 percent to 62.7 rupees. The maker of the construction material fell the most in 2 1/2 years after first-quarter profit dropped 79 percent. Net income in the three months ended June 30 slid to 168 million rupees from 785 million rupees a year earlier.
Kingfisher Airlines Ltd. (KAIR IN) gained 3.9 percent to 51.1 rupees. The airline controlled by billionaire Vijay Mallya plans to recast its loans, according to an investor presentation posted on the website of the company’s parent UB Group. The airline has also appointed Citigroup Inc., Morgan Stanley, CLSA and UBS AG to manage a plan to sell global depositary receipts this year, according to the presentation.
SpiceJet Ltd. (SJET IN) jumped 6.7 percent to 59.8 rupees. The discount carrier will buy 30 Boeing Co. 737-800 aircraft after winning investment from billionaire Kalanithi Maran. Deliveries will start in 2014, the company said in a statement on the Bombay Stock Exchange.
To contact the reporter on this story: Rajhkumar K Shaaw in Mumbai at rshaaw@bloomberg.net.
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