Indian stocks declined after the benchmark stock index posted its biggest three-day gain since September 2011. Utilities and energy companies led the retreat.
The S&P BSE Sensex (SENSEX) retreated 0.6 percent to 19,463.82 at close in Mumbai. The measure’s 30-day volatility climbed to the highest in more than a year. Reliance Industries Ltd. (RIL), owner of the world’s largest refining complex, fell for the first time in four days. Power generator NTPC Ltd. (NTPC) dropped 1.7 percent, ending two days of gains.
The Sensex jumped 5.5 percent in the past three days after the government agreed to raise natural-gas prices as part of a policy overhaul to revive an economy that grew at a decade-low rate of 5 percent in the year ended March. The gauge has fallen 4.1 percent from its two-year high reached on May 17 as the prospect of reduced U.S. stimulus spurred global funds to pull a net $1.76 billion from Indian stocks last month through June 27, ending 12 months of buying, data from the regulator show.
“India remains an overweight position for us, however, the short term is terribly difficult to call,” Adrian Lim, a senior investment manager with Aberdeen Asset Management Plc (ADN), said in an interview to Bloomberg TV India. “India remains one of those markets that are prone to foreign capital movements that can be quite dramatic.”
Reliance fell 1.6 percent to 871.85 rupees, the most since June 20. The stock jumped 8.8 percent last week, the sharpest weekly advance since the period ended Sept. 4, 2011. Oil & Natural Gas Corp. (ONGC), the nation’s largest state explorer, lost 1.9 percent to 321.9 rupees. The stock rallied 7.6 percent last week, ending three straight weeks of losses.
India’s cabinet approved a gas pricing formula recommended in December by a panel led by chief of the prime minister’s Economic Advisory Council. The new rates, which may increase to as much as $8 per million British thermal units, or double the current levels, will come into effect from April 1, 2014.
NTPC dropped 1.7 percent to 145.60 rupees, after rising 3.1 percent yesterday. Tata Power Ltd. decreased 2.2 percent to 86.70 rupees, the most since June 20. Engineering firm Larsen & Toubro Ltd. (LT) lost 1.5 percent to 1,429.5 rupees.
HDFC Bank (HDFCB) decreased 1.8 percent to 656.55 rupees, the most since June 20. State Bank of India lost 1.3 percent to 1,989.9 rupees. Tata Motors (TTMT) Ltd., owner of Jaguar and Land Rover, slid 1.2 percent to 286.45 rupees, the most in a week. Tractor maker Mahindra & Mahindra Ltd. (MM) lost 0.8 percent to 978.9 rupees.
The rupee weakened 0.2 percent to 59.6650 per dollar at the 5 p.m. close, after earlier rising as much as 0.6 percent. The currency sank to a record 60.765 on June 26.
The three-day advance pushed up Sensex’s valuation to 13 times projected 12-month earnings yesterday, the highest level in three weeks and 33 percent more than MSCI Emerging Markets Index’s multiple of 9.8, data compiled by Bloomberg show.
The CNX Nifty Index on the National Stock Exchange of India fell 0.7 percent to 5,857.55. Its July futures settled at 5,863.05. India VIX, which measures the cost of protection against losses in the Nifty, rose 0.7 percent.
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