India’s Sensex Drops to Five-Week Low as Metal, Automakers Fall

Indian (SENSEX) equities retreated, with the benchmark index bound for its lowest level in five weeks, amid concern a deepening economic slowdown and a weakening currency will hurt company earnings.

Bharat Heavy Electricals Ltd. (BHEL), the nation’s biggest maker of power equipments, headed for an eight-year low. Tata Power Co. (TPWR), the biggest non-state-run generator, slid 2 percent ahead of its earnings today. Automakers Maruti Suzuki India Ltd. (MSIL) and Mahindra & Mahindra Ltd. (MM) lost more than 1 percent. The rupee fell to within 0.1 percent of a record low.

The S&P BSE Sensex slid 0.7 percent to 19,051.78 at 9:41 a.m. in Mumbai. The measure dropped 3 percent last week as the rupee had its biggest weekly retreat in almost two years after the Reserve Bank of India said steps to steady the currency are temporary. Foreigners pulled $3 billion from stocks and bonds in July amid concerns the Federal Reserve will cut stimulus and intensify outflows.

The rupee lost 0.4 percent to 61.1300 per dollar as of 9:31 a.m. in Mumbai. The currency, which plunged to a record 61.2125 on July 8, touched 61.1625 earlier today.

Tata Power may say first-quarter group profit rose to 2.2 billion rupees ($36 million), compared with 1.46 billion rupees a year earlier, according to the median of 19 analyst estimates in a Bloomberg survey.

About 41 percent of Sensex companies that have reported earnings so far for the June quarter missed analyst estimates. That compares with 27 percent for the three months ended March, and 43 percent in the quarter through December, data compiled by Bloomberg show.

The Sensex has lost 1.8 percent this year and trades at 13.4 times projected 12-month earnings, compared with the MSCI Emerging Markets Index’s 10 times.

Global funds bought a net $72.4 million of local shares on Aug. 2, a fourth straight day of net purchases, data from the market regulator show. That takes this year’s inflow to $12.4 billion, the data show. They sold $986 million of Indian stocks in July.

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

To contact the editor responsible for this story: Michael Patterson at mpatterson10@bloomberg.net

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