Nov. 23 (Bloomberg) -- Indian stocks dropped for the first time in three days, paring a weekly advance, amid a political impasse over the government’s move to allow foreign companies to open supermarkets.
The BSE India Sensitive Index, or Sensex, fell 0.1 percent to 18,506.57 at the close. The gauge increased 1.1 percent this week, ending two weeks of losses. ITC Ltd., Asia’s second-largest tobacco maker, was the biggest drag on the Sensex. NTPC Ltd., the largest power producer, dropped to the lowest price in about four months.
The lower house of parliament was adjourned today amid uproar over the government’s move to allow foreign retailers to set up in India. The government has called for an all-party meeting on Nov. 26 to solicit support for the plan, the Press Trust of India reported yesterday. Prime Minister Manmohan Singh averted a no-confidence vote yesterday.
“Political uncertainty remains a cause of concern,” said Nirakar Pradhan, chief investment officer at Future Generali India Life Insurance Co. in Mumbai. “The clearance of many important bills listed for consideration in Parliament will be positive. That would signal the government can walk the talk.”
Singh is reaching out to political parties to win backing to push through reforms in the winter parliamentary session that began yesterday, including proposals to increase overseas investment in the insurance and pension industries. He failed to break a logjam yesterday at a dinner hosted for leaders of the biggest opposition Bharatiya Janata Party, the Press Trust said, citing people it didn’t identify.
The S&P CNX Nifty Index on the National Stock Exchange of India Ltd. was little changed at 5,626.60 as three stocks fell for every two that rose on the 50-stock gauge.
India VIX, which measures the cost of protection against losses in the Nifty, slid for a fourth day, falling 1.5 percent to 14.68. Trading volumes of Nifty shares were 22 percent lower than the 30-day average, data compiled by Bloomberg show.
“Trading volumes are shrinking and soon we will get into the December zone when we will see even lesser participation by investors,” said Vaibhav Sanghvi, director at Ambit Investment Advisors Pvt. in Mumbai.
ITC declined 0.8 percent to 286.6 rupees, paring a weekly advance to 4.4 percent. NPTC lost 2.8 percent to 159.4 rupees. Drugmaker Cipla Ltd. decreased 1.4 percent to 381.7 rupees.
Jet Airways (India) Ltd., the world’s second best-performing airline stock this year, jumped 16 percent to 505.6 rupees, the biggest advance since September 2009, on speculation a foreign carrier may buy a stake in the company. The shares have almost tripled this year.
“There is speculation that Jet will sell a 24 percent stake,” said Kishor Ostwal, managing director at CNI Research Ltd. in Mumbai. “That’s why the shares are surging.”
The airline has “no plan at all” for a stake sale, said spokeswoman Ragini Chopra.
The Sensex has increased 20 percent this year, driven by foreign fund flows and government measures to open up Asia’s third-largest economy. The gauge is the second-best performer this year among global benchmark measures with at least $1 trillion in market value, data compiled by Bloomberg show.
Singh started the biggest policy overhaul in a decade in mid-September, including fuel-subsidy curbs and a push to spur investment in domestic industries.
Overseas funds were buyers of local shares for a seventh day yesterday, purchasing a net $33 million of stocks, data from the regulator show. Foreigners have bought a net $19 billion of local shares this year, the most among 10 Asian markets tracked by Bloomberg, excluding China.
The Sensex trades at 15.1 times estimated earnings, compared with the MSCI Emerging Markets Index’s 11.5 times, data compiled by Bloomberg show.
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