Indian stocks fell the most in more than a week, with the benchmark index erasing a weekly advance, on concern corporate earnings are weakening globally and before the Reserve Bank of India reviews monetary policy next week.
The BSE India Sensitive Index, or Sensex, lost 0.7 percent to 18,625.34 at the close in Mumbai. The gauge declined 0.3 percent this week. Reliance Industries Ltd., India’s most valuable company, fell to a six-week low. ICICI Bank Ltd., the second-largest lender, and Hindustan Unilever Ltd., the local unit of the world’s second-largest consumer-goods maker, dropped after their earnings reports.
The MSCI Asia Pacific Index dropped 1.1 percent as South Korea’s economy grew at the slowest pace in three years and companies such as Canon Inc. and China Unicom (Hong Kong) Ltd. posted earnings that missed estimates. India’s central bank may leave its benchmark interest rate unchanged at 8 percent at a policy review on Oct. 30, according to the median estimate of 28 analysts in a Bloomberg survey.
“The global cues are not encouraging as some of the earnings numbers have disappointed,” said Alex Mathews, head of research at Geojit BNP Paribas Financial Services Ltd. in Kochi. “Some of the local traders are waiting on the sidelines for the RBI policy. If a rate cut happens, that can be a catalyst for the next uptrend.”
The Sensex has surged 21 percent this year, the best performance among major emerging markets, as foreigners bought a net $18.2 billion of domestic shares, the most among 10 Asian markets tracked by Bloomberg, excluding China. Earnings have trailed analyst forecasts at only two of the 15 Sensex companies that have reported results for the quarter ended September, compared with 40 percent in the three months through June, data compiled by Bloomberg show.
Finance Minister Palaniappan Chidambaram said Oct. 12 that India needs cheaper credit, following a revamp of economic policy that included fuel-subsidy curbs and helped make the rupee one of Asia’s best-performing currencies in the past three months. The central bank last month left rates unchanged for a third straight meeting to fight price increases.
The authority will reduce the cash reserve ratio by 25 basis points on Oct. 30, according to 11 of 18 economists surveyed by Bloomberg. India’s inflation, measured by the wholesale-price index, rose 7.81 percent last month, the fastest pace in 2012, fueled by higher diesel costs, government data showed on Oct. 15.
ICICI Bank’s quarterly profit jumped 30 percent, beating analysts’ estimates, as bad loans fell and lending profit rose. Net income climbed to 19.6 billion rupees ($365 million) for the three months ended Sept. 30, from 15 billion rupees a year earlier. That surpassed the 18.7 billion rupee median of analysts’ estimates compiled by Bloomberg. The shares decreased 0.8 percent to 1,078.35 rupees, after gaining as much as 1.4 percent. The stock has advanced 58 percent this year, the second best performer on the Sensex.
Hindustan Unilever Ltd., the maker of Dove shampoo, slid 2.1 percent to 552.20 rupees after second-quarter sales rose 12 percent to 61.6 billion rupees, missing the 62.6 billion rupee median estimate of 25 analysts.
The S&P CNX Nifty Index of 50 companies dropped 0.7 percent to 5,664.30 and its November futures settled at 5,699.30. The BSE-200 Index lost 0.9 percent and the BSE Mid-Cap Index declined 0.8 percent. The National Stock Exchange of India and the BSE Ltd. traded 1.1 billion shares yesterday, 17 percent more than the 12-month daily average.
Reliance fell 1.4 percent to 798.95 rupees. Drugmaker Cipla Ltd. retreated 1.9 percent to 354.95 rupees. ITC Ltd., the biggest cigarette company, lost 2.1 percent to 285.85 rupees.
Overseas funds were net buyers of Indian shares for a fifth straight day on Oct. 23, purchasing a net $79.6 million of shares, according to data from the nation’s market regulator.