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Most Indian Stocks Drop as Factory Output Falls; Infosys Jumps

Jan. 11 (Bloomberg) -- Most Indian stocks dropped, led by consumer goods companies and industrials, as a contraction in the nation’s factory production countered better-than-expected earnings by Infosys Ltd.

All but four of the 30 shares on the BSE India Sensitive Index fell even as the measure closed unchanged at 19,663.64. Cigarette maker ITC Ltd. and Bharat Heavy Electricals Ltd., the largest power-equipment maker, slid more than 2 percent. Infosys, the second-largest software maker, soared a record 17 percent after raising its full-year sales forecast. The stock was the best performer on the gauge, followed by rivals Tata Consultancy Services Ltd. and Wipro Ltd.

Industrial output fell 0.1 percent in November from a year earlier, government data showed. The median of 34 estimates in a Bloomberg survey was for a 0.1 percent gain. Exports slid 1.9 percent last month from a year ago, a separate report showed. Foreigners have bought a net $1.5 billion of shares this year, more than three times the level at the same time in 2012, data from the regulator show. The Sensex closed near a two-year high on Jan. 8, extending last year’s 26 percent gain.

“While the market is being supported by liquidity from foreign investors there are enough things to worry about on the ground,” Dilip Bhat, joint managing director at Mumbai-based Prabhudas Lilladher Pvt., told Bloomberg TV India today.

The Indian stock gauge last year had its biggest annual rally since 2009, as Prime Minister Manmohan Singh opened the economy to more foreign investments in the past four months to boost an economy growing at the slowest pace in three years and to avert a credit-rating downgrade. The steps prompted offshore funds to invest a net $24.5 billion into domestic shares last year, the highest among 10 Asian markets tracked by Bloomberg.

Sales Guidance

Infosys, the first Sensex company to announce earnings for the December quarter, raised its sales forecast about 3 percent to 407.5 billion rupees ($7.5 billion) and reported net income of 23.7 billion rupees. That surpassed the 22.4 billion-rupee median of 42 analyst estimates compiled by Bloomberg. The stock was the worst performer on the Sensex in 2012.

Infosys soared 17 percent to 2,712.1 rupees, the sharpest gain since the company’s debut in 1993. Rival Tata Consultancy, due to declare earnings on Jan. 14, rallied 3.8 percent to 1,306.35 rupees. Wipro jumped 6.2 percent to 419.95 rupees.

Net incomes of the 30 Sensex companies may grow 11 percent from a year ago in the December quarter, after rising 7 percent in the previous three months, Kotak Institutional Equities said in a Jan. 3 report. Profit for 40 percent of the Sensex firms missed analysts’ estimates for the September quarter, the same as for the quarter ended June, data compiled by Bloomberg show.

‘Positive Trend’

“If the quarterly numbers surprise a little bit on the upside, stocks will rally as we had been a bit pessimistic,” Sunil Singhania, who helps oversee $16 billion in assets as the head of equities at Reliance Capital Asset Management Ltd., said at an investor conference in Mumbai today. “Don’t go by the actual numbers, go by the trend. The trend, whether it be with earnings or economic growth, will be positive.”

ITC retreated 2.7 percent to 273.4 rupees and Hindustan Unilever Ltd., the nation’s biggest home-products maker, sank 3.6 percent to 498.1 rupees. The BSE India FMCG Index of 10 consumer goods companies fell to a two-month low.

Reliance Industries Ltd., owner of the world’s largest refining complex, dropped 1.2 percent to 839.9 rupees. Bharat Heavy lost 2.2 percent to 226.85 rupees. Mahindra & Mahindra Ltd., India’s largest maker of sport-utility vehicles, slid 2.4 percent to 937.9 rupees.

The S&P CNX Nifty Index on the National Stock Exchange of India fell 0.3 percent to 5,951.30. Its January futures settled at 5,977.30. The BSE Mid-Cap Index decreased 1.5 percent, the most in more than five months. India VIX, which gauges the cost of protection against losses in the Nifty, declined 0.3 percent.

The Sensex trades at 15.6 times estimated earnings, the highest reading since March. The MSCI Emerging Markets Index is valued at 10.9 times, according to data compiled 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: Darren Boey at dboey@bloomberg.net

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