India’s Sensex Ends Four-Day Rally as Reliance, HDFC Retreat

Indian (SENSEX) stocks dropped for the first time in five days as some investors judged the gains excessive.

Reliance Industries Ltd. (RIL), the owner of the world’s largest refining complex, fell 1.4 percent after reaching a five-week high yesterday. Housing Development Finance Corp. (HDFC), the nation’s biggest mortgage lender, retreated 3 percent after its steepest three-day climb in more than four years. Tata Motors Ltd. (TTMT), the owner of Jaguar Land Rover, climbed 2.9 percent.

The S&P BSE Sensex lost 0.5 percent to 18,786.30 at 9:34 a.m.in Mumbai. The gauge climbed yesterday to a two-week high as a drop in oil costs countered the nation’s slowest quarterly economic growth in four years. India’s economy grew 4.4 percent in the June quarter, the weakest pace since 2009, official data showed Aug. 30, while manufacturing output fell last month, a separate report showed yesterday. The rupee lost 1.1 percent to 66.7350 per dollar today.

“We had a good bounce, but given economic fundamentals, investors are not sure how far this can be sustained,” Surya Narayan Nayak, an analyst at Networth Stock Broking Ltd., said by phone from Mumbai today. “There are too many moving parts in the near term, such as oil prices, the rupee movement and government measures to boost growth.”

The rupee plunged 8.1 percent last month, the most since March 1992 and the steepest among 78 global currencies tracked by Bloomberg. It touched an unprecedented 68.8450 on Aug. 28.

The Sensex has dropped 3 percent this year and is valued at 13.3-times projected 12-month earnings, compared with the five-year average of 14.1 times, data compiled by Bloomberg show. The MSCI Emerging Markets Index is trading at 10.2 times.

Global funds sold a net $15 million of domestic shares on Aug. 30, capping a $947 million monthly outflow, data from the market regulator show. That extended net sales of $986 million in July and $1.76 billion in June. Foreigners have still bought a net $11.4 billion of Indian equities this year, the second-highest among 10 Asian markets tracked by Bloomberg.

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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