India’s benchmark stock index fell for a fifth day, led by lenders and industrial companies, amid concern sale of shares in government companies may sap funds from the market.
The BSE India Sensitive Index, or Sensex, lost 0.1 percent to 19,639.72 at the close. ICICI Bank Ltd., the third-biggest lender by assets, dropped to the lowest since Dec. 31. Larsen & Toubro Ltd., India’s largest engineering company, retreated to an almost five-month low.
The government plans to raise about $2.1 billion selling shares in utility NTPC Ltd. tomorrow in the nation’s biggest offering in a year to narrow a budget deficit. Last week, it raised 31.4 billion ($590 million) rupees selling a 10 percent stake in state-owned Oil India Ltd., helping meet one-third of its target to raise 300 billion rupees from state asset in the year ending March 31.
“The ambitious share-sale plan in government companies is drawing out some liquidity from the markets,” Nirakar Pradhan, chief investment officer at Future Generali Life Insurance, said by telephone. “Consistent buying by overseas investors, however, seems to be providing some support.”
The government, which owns 84.5 percent of NTPC, will sell 783.3 million shares, or 9.5 percent stake, at a minimum price of 145 rupees apiece, according to a statement. The shares slid 2.4 percent to 151.8 rupees, the lowest close since Dec. 13.
Finance Minister Palaniappan Chidambaram plans to narrow the budget gap to 5.3 percent of gross domestic product this financial year from 5.8 percent to improve public finances and avert a credit-rating downgrade. Standard and Poor’s and Fitch Ratings reduced their outlooks on India’s rating, currently at the lowest investment-grade level, to negative in 2012 and said the large fiscal deficits and debt are constraining ratings.
Overseas funds have bought a net $5.69 billion of domestic shares this year, a record for the period, data compiled by Bloomberg show. They bought a net $24.5 billion last year, the most among 10 Asian markets tracked by Bloomberg, attracted by government efforts to rein in subsidies, allow higher foreign investment in retailing and aviation, and hasten infrastructure projects in a bid to revive economic growth. The administration raised train fares and diesel prices in January to help narrow the budget deficits.
“Global factors are benign now and the domestic situation also looks better as the government’s recent policy actions have been reassuring,” Harshad Patwardhan, executive director and head of equities at JPMorgan Asset Management India Pvt., said in an interview with Bloomberg TV India today.
ICICI Bank declined 0.9 percent to 1,155.25 rupees, lowest close since Dec. 31. State Bank of India, the biggest, declined 1 percent to 2,348.7 rupees. HDFC Bank Ltd. lost 0.7 percent to 639.5 rupees.
Larsen & Toubro slid 1.4 percent to 1,513 rupees, lowest close since Sept. 14, and Bharat Heavy Electricals Ltd. lost 1.4 percent to 208.5 rupees, a four-month low.
Maruti Suzuki India Ltd., the country’s biggest carmaker by volume, added 1.7 percent to 1,627.85 rupees, the highest price since December 2009. Tata Steel Ltd. added 0.7 percent. Aluminum maker Hindalco Industries Ltd. jumped 0.8 percent to 114.4 rupees. Housing Development Finance Corp., India’s largest mortgage lender, increased 1.3 percent to 807.75 rupees.
Volumes on the Sensex were 5 percent more than the 30-day average at the close. The gauge trades at 13.7 times estimated earnings for the year to March 2014, according to data compiled by Bloomberg. The MSCI Emerging Markets Index is valued at 9.9 times estimated earnings, the data show.
The S&P CNX Nifty Index on the National Stock Exchange of India Ltd. added less than 0.1 percent to 5,959.20. India VIX, which measures the cost of protection against losses in the Nifty, dropped 2.4 percent to 14.26.