Indian stocks fell for a sixth day, the longest losing streak since November, after government data forecast the weakest economic growth in a decade.
The BSE India Sensitive Index, or Sensex, slid 0.3 percent to 19,580.32, the lowest close since Dec. 31. Cipla Ltd., the country’s third-biggest drugmaker, dropped to a two-week low after its profit missed analysts’ estimates for the first time in four quarters. Utility NTPC Ltd. declined to an eight-month low as the government sold $2.2 billion of shares of the power utility in the nation’s largest offering since March.
Gross domestic product may grow 5 percent in the 12 months through March 31, below last year’s 6.2 percent and the least since 4 percent in 2002-2003, government data showed today. The Reserve Bank of India last month forecast the economy will grow at 5.5 percent this fiscal and the Finance Ministry in December said GDP may increase as little as 5.7 percent.
“The latest estimate is the worst of all projections issued by the government and the RBI,” Amar Ambani, head of research at a Mumbai-based brokerage India Infoline Ltd., said by e-mail. “GDP growth will be lower due to poor performance of manufacturing, agriculture and services sectors.”
India’s economy is in a weaker position than before the global financial crisis and the Reserve Bank must refrain from cutting borrowing costs further until inflation is contained, the International Monetary Fund said yesterday. The RBI lowered rates last month, the first cut since April, and said there’s limited space for further easing because of price pressures.
Gross domestic product will climb 5.4 percent in the 12 months through March 2013, and 6 percent the following fiscal year, the IMF said. Inflation will ease to 7.2 percent by March 2014 from 7.8 percent in March this year and the budget deficit is likely to be 5.6 percent of GDP this fiscal year, above the government’s 5.3 percent goal, it added.
NTPC fell 2.5 percent to 148.05 rupees, the lowest close since June 5. The government will raise more than $2.2 billion from the share sale, Disinvestment Secretary Ravi Mathur said, as demand exceeded the number of shares offered. Last week, the government 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 assets in the year ending March 31.
Finance Minister Palaniappan Chidambaram has vowed to pare the budget shortfall to damp inflation, part of a wider policy overhaul since September to revive economic growth. The steps have prompted foreign funds to buy a net $5.94 billion of local shares this year, a record for the period, data compiled by Bloomberg show. They bought $24.5 billion in 2012, the highest among 10 Asian markets tracked by Bloomberg, excluding China.
‘Buy on Dips’
“Policy reforms and measures to correct the fiscal and current account deficits are underway,” Manish Sonthalia, who manages $255 million in equities at Mumbai-based Motilal Oswal Asset Management Co., told Bloomberg TV India. “It is a market meant to be bought on dips rather than sell at current prices.”
Cipla slid 2.7 percent to 394.1 rupees after the company reported profit grew 26 percent to 3.39 billion rupees in the December quarter, missing the median estimate of 3.5 billion rupees in a Bloomberg survey. Earnings were announced after markets closed yesterday.
Six out of 18, or 30 percent, of Sensex companies that have reported December-quarter earnings have missed forecasts, compared with 40 percent in the previous two quarters, data compiled by Bloomberg show.
“There are no real signs of an earnings recovery based on the third quarter numbers,” Sanjeev Prasad, senior executive director of Kotak Institutional Equities, told Bloomberg TV India. “There’s no recovery in the underlying trend as far as volume, margins and non-performing loans are concerned.”
Bharti Airtel Ltd., the country’s largest mobile services company, lost 2 percent to 320.1 rupees. Sterlite Industries India Ltd. declined 3 percent to 104.6 rupees.
The S&P CNX Nifty Index on the National Stock Exchange of India Ltd. fell 0.3 percent to 5,938.80. India VIX, which measures the cost of protection against losses in the Nifty, rose 4.4 percent to 14.89.