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Indian Stocks Decline for Fourth Week on Europe, Rupee Concerns

Indian stocks retreated, with the benchmark index completing its fourth straight week of losses, as overseas funds turned net sellers amid concerns Europe’s debt crisis is worsening.

Infosys Ltd. (INFO), India’s second-largest software maker that gets 98 percent of its sales from abroad, fell to a six-week low. Tata Steel Ltd. (TATA), the largest producer, dropped to its lowest since July 2009. Bharat Heavy Electricals Ltd., (BHEL) the biggest power-equipment maker, rose for a second day after falling to a three-year low on Nov. 23.

The BSE India Sensitive Index (SENSEX), or Sensex, lost 1 percent to 15,695.43 at the 3:30 p.m. close in Mumbai. The gauge fell 4.1 percent this week and is set for the biggest monthly loss since October 2008. Overseas investors withdrew $485 million from Indian shares this week, the most in three months, data from the regulator show. Emerging-market funds pulled out $2.7 billion in the week ended Nov. 23, Citigroup Inc. said today, citing data compiled by EPFR Global.

“With political and policy uncertainty, particularly with the ongoing crisis in Europe, I don’t think risk appetite is going to come back for quite a while,” Geoff Lewis, head of investment services at JPMorgan Asset Management in Hong Kong, said in an interview with Bloomberg UTV today. “I don’t think we are going to see big inflows into emerging markets in the short term. We will have to wait until investors are sure that the U.S. is not going to join Europe into a recession.”

Concerns over European debt mounted this week after bids for German bonds in a sale fell 35 percent short of the amount on offer. Euro bonds are “not needed and not appropriate,” German Chancellor Angela Merkel said at a press conference with Italian Prime Minister Mario Monti and French President Nicolas Sarkozy in Strasbourg, France yesterday.

Global Equities

More than $4 trillion has been erased from the value of equities worldwide this month as rising borrowing costs in the euro-area stoked concern the debt crisis will derail growth. The MSCI Asia Pacific Index (MXAP) dropped 1.1 percent to 108.94 at 4:36 p.m. Mumbai time. The measure has retreated 4.6 percent this week, headed for a fourth weekly loss.

The Sensex has slumped 23 percent this year amid concern a weaker currency and record funding-cost increases may compound the effects of the global economic crisis on domestic earnings. Companies in the gauge trade at 13.6 times future profits, near the lowest level since May 2009. The MSCI Emerging Markets Index (MXEF) trades at 9.6 times, data on the Bloomberg show.

Forty percent of Sensex company earnings missed estimates in the September quarter, compared with 47 percent in the June quarter and 33 percent in March, the data show.

Monetary Tightening

The Reserve Bank of India on Oct. 25 signaled it’s nearing the end of monetary tightening after it increased rates for the 13th time since last March to tame inflation that’s exceeded 9 percent for 11 straight months.

The S&P CNX Nifty Index on the National Stock Exchange of India Ltd. dropped 1 percent to 4,710.05. The BSE 200 Index retreated 0.6 percent to 1,914.89.

Infosys decreased 2.5 percent to 2,599.7 rupees, its lowest level since Oct. 11. Tata Consultancy Services Ltd. (TCS) fell 2.6 percent to 1,063.9 rupees, its steepest fall in a week. Tata Steel slid 2.8 percent to 374.95 rupees, its lowest level since July 14, 2009.

Bharat Heavy Electricals Ltd., the biggest power-equipment maker, rallied 3.2 percent to 270.05 rupees. The stock touched its lowest level since December 2008 on Nov. 23. Larsen & Toubro Ltd. (LT), the largest engineering company, advanced 3.4 percent to 1,265.95 rupees, paring this year loss to 36 percent.

Wal-Mart

Pantaloon Retail India Ltd. (PF), the largest retailer, surged 16 percent to 233.95 rupees, its steepest gain in 2 1/2 years, after the cabinet yesterday approved easing of ownership rules in retail. Shoppers Stop Ltd. (SHOP) jumped 6.3 percent to 395.8 rupees. Trent Ltd. (TRENT), Tesco (TSCO) Plc’s India partner, rose 8.6 percent to 1,058.15 rupees, its biggest since August 2010.

CESC Ltd. (CESC), whose parent RP-Sanjiv Goenka Group also runs closely held Spencer’s Retail, surged 8.9 percent to 274.55 rupees. Vishal Retail Ltd. (VISH) surged 20 percent to 22.7 rupees. Koutons Retail India Ltd. (KUTN) advanced 9.6 percent to 23.95 rupees.

The cabinet yesterday approved allowing overseas companies to own as much as 51 percent of retailers selling more than one brand, paving the way for companies such as Wal-Mart Stores Inc. (WMT) and Tesco to own stores, Food Minister K.V Thomas said.

Wal-Mart, Carrefour SA (CA) and Tesco seek to invest in the world’s second-most populous nation to tap a market expected to almost double to $785 billion by 2015 from $396 billion this year, according to Business Monitor International.

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

To contact the editor responsible for this story: Darren Boey at dboey@bloomberg.net

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