Indian Stocks Decline as Infosys Results Outweigh Output Data

Indian stocks declined, heading for the first weekly retreat in six, as a cut in profit margin and sales outlook by Infosys Ltd. (INFO) outweighed better-than-estimated factory production data.

The BSE India Sensitive Index (SENSEX), or Sensex, slid 0.8 percent to 18,658.01, according to preliminary closing prices at 3:30 p.m. in Mumbai. The gauge dropped 1.5 percent drop this week, ending a five-week rally. Infosys, the second-largest software exporter, slumped as much as 8.8 percent. Wipro Ltd. (WPRO) declined 2.3 percent.

Industrial production rebounded, rising 2.7 percent in August from a year earlier, government data showed today. The median of 36 estimates in a Bloomberg News survey was for a 1.1 percent gain. Infosys flagged off the second-quarter earnings season today. Twenty one of the 30 Sensex companies will report profits increased from a year earlier, according to Bloomberg surveys. Infosys has a 7.4 percent weighting on the Sensex.

“While Infosys’ ability to set the trend for the earnings season is coming down, the stock has a high weighting on the index,” Avinash Gupta, an independent market analyst, said by phone from New Delhi today. “Given the rally over the past few weeks, some investors are likely to take money off the table.”

The Sensex has surged 21 percent this year as foreigners bought a net $17.7 billion of local stocks, the most among 10 Asian markets tracked by Bloomberg, excluding China. The gauge trades at 14.9 times estimated earnings, compared with the MSCI Emerging Markets Index (MXEF)’s multiple of 11.4 times.

Overseas investors were net buyers of Indian equities for a 13th straight day on Oct. 10, data from the market regulator showed yesterday. India equity funds attracted $157 million in the week through Oct. 10, the most in Asia, Citigroup analysts led by Markus Rosgen wrote in a report today, citing data from EPFR Global.

To contact the reporters on this story: Shikhar Balwani in Mumbai at sbalwani@bloomberg.net; 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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