Indian stocks dropped for a fourth day, the longest losing run in two months, after the nation’s biggest bank said the central bank may raise interest rates and Hindustan Unilever Ltd. (HUVR) slid on analysts downgrades.
State Bank of India fell to its lowest close in 18 months. Chairman Pratip Chaudhuri said the Reserve Bank of India may raise the key interest rate and cash reserve ratio at its meeting tomorrow in a move to defend the rupee. Hindustan Unilever had its biggest loss in six months after the stock was reduced by Macquarie Group Ltd. and JPMorgan Chase & Co. Software exporter Wipro Ltd. (WPRO) surged the most in four years after forecasting record sales.
The S&P BSE Sensex lost 0.8 percent to 19,593.28 at the close in Mumbai. The gauge fell 2 percent last week as the RBI raised two interest rates, curbed lenders’ access to funds and limited trades in currency derivatives to steady the rupee. Chaudhuri’s views contradicts 31 of 32 analysts in a Bloomberg survey who predict no change to the benchmark rate, while 29 of 30 expect the reserve ratio to remain unchanged at 4 percent.
“Investors are concerned that the RBI commentary might be hawkish,” Supreeth S.M., the chief executive officer at Quant First Asset Advisors India, said by telephone from Bangalore. “There’s concern the central bank may signal a reversal in the interest-rate easing cycle.”
The central bank’s decision is due at 11 a.m.
Hindustan Unilever slumped 3.8 percent to 638.55 rupees, the sharpest drop since Jan. 23. Earnings may grow at a slower pace amid slowing sales and narrowing profit margins, JPMorgan said in a report dated yesterday. Muted growth in the company’s personal-care products business is a disappointment, Macquarie said in a report today.
Cigarette maker ITC Ltd. (ITC) decreased 2.8 percent to 357.95 rupees. Hindustan Unilever and ITC have a combined 16 percent weighting in the Sensex, data compiled by Bloomberg show.
State Bank fell 1.4 percent to 1,740.05 rupees, the lowest close since Jan. 11, 2012. HDFC Bank Ltd. (HDFCB), the largest lender by market value, slid 1.8 percent to 632.5 rupees, a fourth day of declines. The CNX Bank Index lost 1.3 percent to 10,331.
Wipro surged 6.8 percent to 408.05 rupees, the most since July 2009. Wipro joins larger rival Tata Consultancy Services Ltd. (TCS) in signaling higher demand for outsourced software work by forecasting revenue from the business to rise as much as $1.65 billion in the September quarter. The guidance is the strongest in more than two years, according to Espirito Santo Securities.
The Sensex trades at 13.7 times estimated 12-month earnings, compared with the MSCI Emerging Markets Index’s 10 times. Four of the 13 Sensex members that have announced earnings so far for the June quarter missed analyst estimates.
International investors bought a net $49.1 million of local shares on July 26, taking this year’s net purchases to $12.3 billion, data compiled by Bloomberg show. They have sold $1 billion of Indian (SENSEX) stocks this month, the most among 10 Asian markets tracked by Bloomberg.
The CNX Nifty Index on the National Stock Exchange fell 0.9 percent to 5,831.65. India VIX, which gauges the cost of protection against losses in the Nifty, advanced 8.8 percent.
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