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India’s Nifty Stock Futures Decline on Earnings, Monsoon

Indian stocks fell for a third day, capping their first weekly loss in six, ahead of data that may show inflation accelerated in June, weakening the case for an interest-rate cut by the central bank.

Infosys Ltd., the second-largest Indian software exporter, dropped for a second day after earnings fell short of estimates and the company lowered its sales outlook. Larger rival Tata Consultancy Services Ltd. climbed 1.1 percent after reporting profit of 32.8 billion rupees, exceeding the median estimate of 31.8 billion rupees in a Bloomberg survey of 40 analysts. State Bank of India, the largest lender, lost 1.9 percent.

The BSE India Sensitive Index, or Sensex, slid 0.1 percent to 17,213.7, the lowest close since June 28. The gauge lost 1.8 percent this week, ending a five week, 4.8 percent rally.

“Earnings so far have been mixed and with key inflation data due to be released next week, investors aren’t committing a lot,” Sunil Pachisia, vice-president at brokerage Pratibhuti Viniyog Ltd., said by phone in Mumbai. “If inflation accelerates, the central bank may not act on rates.”

Wholesale prices probably rose 7.61 percent in June from a year ago, according to a median of 36 economists’ estimates in a Bloomberg survey. Prices increased a faster-than-estimated 7.55 percent in May, which the Reserve Bank of India deemed too high last month to lower rates at its June 18 meeting. The government will release the inflation data on July 16.

Earnings Performance

One out of four, or 25 percent, Sensex companies that have reported results for the June quarter have missed analysts’ estimates, according to data compiled by Bloomberg. Profit at 30 percent of the companies in the measure trailed forecasts in the March quarter, compared with 47 percent in the period ended December, data show.

Profits at the 30 companies in the gauge may drop 14 percent to 1,284 rupees per share in the year to March, the most in three years, estimates compiled by Bloomberg show.

Infosys fell 1.5 percent to 2,229.80 rupees, the lowest close in ten months. State Bank lost 1.9 percent to 2,178.45 rupees and Jindal Steel & Power Ltd. slumped 3.1 percent to 431.10 rupees, pacing losses among metal producers.

The Sensex has advanced 11 percent this year and trades at 13.4 times estimated earnings. The MSCI Emerging Markets Index trades at 10 times.

Tata Consultancy jumped 1.1 percent to 1,249.40 rupees, the most in two weeks. Net income rose to 32.8 billion rupees in the quarter ended June, TCS said in a statement yesterday after the markets closed. The median of 40 analysts’ estimates compiled by Bloomberg was a 31.8 billion-rupee profit.

HDFC Earnings

HDFC Bank Ltd., the second-largest private lender, climbed 1.2 percent to 587.05 rupees. First-quarter net income rose 31 percent from a year earlier to 14.2 billion rupees, matching the median estimate of 24 analysts in a Bloomberg survey.

India VIX, which measures the cost of protection against losses in the S&P CNX Nifty Index, lost 2.4 percent to 18.26. The Nifty fell 0.2 percent to 5,227.25 and its July futures settled at 5,240.45. The BSE-200 Index lost 0.3 percent to 2,126.71. Combined trading volume on India’s top two exchanges was 837.14 million shares yesterday, compared with a 12-month daily average of 904.3 million.

Overseas funds bought a net $56 million of local stocks on July 12, a ninth straight day of purchases that took their investment this year to $9.8 billion, according to the market regulator. That’s a record for the period, according to data compiled by Bloomberg.

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