Most Indian Stocks Decline; Software Exporters Drop, State Bank Advances

Most Indian stocks retreated. Software exporters and metal producers fell as concern mounted that economic growth in the U.S. and China is slowing and after domestic factory output rose the least in 13 months.

Infosys Technologies Ltd. led a retreat by software exporters, which get more than half of their sales in the U.S. Sterlite Industries (India) Ltd., a copper producer, led a drop by peers as raw material prices slumped. State Bank of India, the nation’s largest, soared to a record after posting its fastest profit growth in four quarters.

“Whether it’s U.S. or China growth slowing, either of these can puncture the world market,” said Ambareesh Baliga, vice president of equities at Karvy Stock Broking Ltd. in Mumbai. “If that happens, there’s no way India can move against the world. At the end of the day, it’s the foreign flows that support markets here.”

The Bombay Stock Exchange’s Sensitive Index, or Sensex, was little changed at 18,073.90. Three shares fell for each two that rose on the gauge. The S&P CNX Nifty Index on the National Stock Exchange fell less than 0.1 percent to 5,416.45. The BSE 200 Index gained 0.2 percent to 2,308.77.

Infosys, the second-largest software services provider, declined 1.4 percent to 2,772.7 rupees, while larger rival Tata Consultancy Services Ltd. dropped 0.6 percent to 853.45 rupees. Wipro Ltd., the third-biggest software services provider, lost 1.7 percent to 411.65 rupees.

Factory Output

India’s output at factories, utilities and mines rose 7.1 percent from a year earlier, the slowest pace since May 2009, the statistics department said in New Delhi today. The median estimate of 21 economists in a Bloomberg News survey was for an 8.1 percent increase. Today’s number may also have been affected by the comparison with a year earlier, when production jumped as the economy recovered from the global financial crisis.

The U.S. trade deficit unexpectedly widened in June to the biggest gap since October 2008, the Commerce Department said yesterday, a day after the Federal Reserve said the economic recovery is slowing and needs fresh stimulus. Reports this week showed growth in China’s imports and industrial production slowed, while Japanese machinery orders missed estimates. Goldman Sachs Group Inc. on Aug. 7 cut its predictions for growth in the U.S. and Japan.

Metal Producers

Sterlite declined 2.8 percent to 167.5 rupees, its steepest drop since July 1. Copper may fall for a third day in London on concern that metals demand may dwindle as economic growth slows in the U.S. and China, the world’s two biggest users.

Sesa Goa Ltd., the nation’s largest iron ore exporter, fell 4.8 percent to 352.65 rupees, the most since June 7. NMDC Ltd., Asia’s third biggest iron ore producer, lost 1.8 percent to 257.25 rupees. India’s mines ministry proposed mining companies allocate as much as 26 percent of their profit to develop the area where they operate, dropping an earlier proposal to also give residents an equal stake in the projects.

State Bank jumped 7.1 percent to 2,784.4 rupees. Net income climbed 25 percent to 29.1 billion rupees ($622 million) for the three months ended June 30. That beat the 24.4 billion rupee average of 25 estimates compiled by Bloomberg News.

Overseas funds bought a net 6.14 billion rupees ($132.5 million) of Indian equities on Aug. 10, raising total investments in the stocks this year to 525.7 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:

Bharati Shipyard Ltd. (BHSL IN) dropped 2.9 percent to 229.05 rupees. The nation’s second-biggest shipyard was downgraded to “market perform” from “buy” by Amit Agarwal, an analyst at SBI Capital, with a share-price estimate of 280 rupees.

Jubilant FoodWorks Ltd. (JUBI IN) gained 2.8 percent to 453.65 rupees. The franchisee of Domino’s Pizza Inc. said it will form a unit in Sri Lanka.

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

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