Indian Stocks Decline for Third Day; Reliance, TCS Drop

Indian stocks fell, with the gauge of medium-sized companies falling the most in two months, amid a disruption in parliament proceedings that prevented discussion on legislations including the banking bill.

The BSE India Sensitive Index (SENSEX), or Sensex, lost 0.1 percent to 19,387.14 at the close, erasing a 1-percent intraday gain. The 246-member BSE MidCap Index retreated 1.2 percent, the most since Oct. 10. Reliance Industries Ltd. (RIL), owner of the world’s largest oil-refining complex, dropped for a third day, and Tata Consultancy Services Ltd. (TCS), the biggest software maker, slid for a sixth day. The two stocks were the biggest drag on the Sensex.

Opposition lawmakers stalled parliament, demanding a probe into reports that Wal-Mart Stores Inc. (WMT) spent money lobbying for entry into India’s retail market. Parliament last week endorsed a September decision to allow foreign investment in multi-brand retailing, the centerpiece of Prime Minister Manmohan Singh’s biggest policy overhaul in a decade. The win stoked speculation Singh will push ahead with further reforms to revive economic growth that slowed to a three-year low.

“Investors may have to scale down policy expectations as the government will struggle to pass key bills due to fierce opposition,” Kishor Ostwal, managing director at CNI Research Ltd. (CNIR) in Mumbai, said in a phone interview today.

Singh in mid-September opened aviation and retailing to foreigners, lowered fuel subsidies and cut a tax on companies’ overseas loans. He is due to present in the current session of the parliament proposals to raise the foreign investment cap for the insurance sector, and allow overseas companies to buy stakes in pension firms for the first time.

Worst Performer

Reliance fell 1 percent to 820.05 rupees. Tata Consultancy slid 1.4 percent to 1,219.7 rupees. Bharat Heavy Electricals Ltd. (BHEL), the biggest power-equipment producer, sank 2.5 percent to 237.3 rupees, the most since Nov. 21.

State Bank of India, the biggest lender by assets, lost 0.5 percent to 2,308.8 rupees, snapping a 10-day, 11 percent rally. The BSE India Bankex Index (BANKEX) slid 0.4 percent. The gauge of 14 lenders had risen 1.3 percent intraday before a likely discussion on the banking bill in parliament. The proposal, if passed, will grant more powers to the central bank and lift the cap on voting rights for shareholders of lenders.

Wal-Mart Stores spent as much as $25 million since 2008 on discussions regarding its foreign investments, including in the Indian retail industry, the Press Trust of India reported Dec. 9, citing disclosure reports the company filed with the U.S. Senate. The government “has no hesitation” in ordering a probe, Parliamentary Affairs Minister Kamal Nath said today.

“These allegations are entirely false,” Arti Singh, a spokeswoman for Wal-Mart’s Indian wholesale joint venture, said in an e-mailed statement.

‘Low-Hanging Fruits’

The Sensex has risen 25 percent this year, poised for its biggest annual advance since 2009, as a burst of policy-making attracted foreigners. Offshore funds have plowed $21 billion into Indian equities this year, the most among 10 Asian markets tracked by Bloomberg, excluding China.

“There are so many low-hanging fruits in terms of reforms that we can see a sequence of positive surprises over the next six to 12 months, just like the string of negative surprises we saw over the last three years,” Madhav Dhar, managing partner of U.S.-based GTI Capital Group, told Bloomberg TV India today. “The market is taking an optimistic view of things.”

The S&P CNX Nifty (NIFTY) Index on the National Stock Exchange of India Ltd. retreated 0.2 percent to 5,898.80. The NSE CNX Small Cap Index slid 1.2 percent to 3,699.55. It gained for the 13th day yesterday, its longest winning run since January 2004.

Kingfisher Airlines Ltd. (KAIR), which is not part of the Sensex, rose by the 4.7 percent limit after the Mumbai Mirror newspaper reported that Abu Dhabi’s Etihad Airways agreed to buy a 48 percent stake in the carrier for more than 30 billion rupees.

Discussions are on with various investors, including Abu Dhabi-based Etihad, Kingfisher said in a statement to the NSE today after markets closed. It hasn’t reached an agreement with anyone, according to the statement.

To contact the reporter on this story: Santanu Chakraborty in Mumbai at schakrabor11@bloomberg.net

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

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