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India’s Sensex Completes Longest Losing Streak in 14 Months

Indian stocks dropped for a seventh day, the longest losing run since November 2011, amid concern over economic growth and as earnings of some companies missed analysts’ estimates.

The BSE India Sensitive Index, or Sensex, fell 0.5 percent to 19,484.77 at the close, with volumes 82 percent higher than the 30-day average. Cipla Ltd. sank 3.4 percent and led other drugmakers lower after posting a lower-than-expected net income yesterday. Tractor maker Mahindra & Mahindra Ltd. dropped the most in three weeks after quarterly profit trailed estimates.

India’s economy may expand 5 percent in the fiscal year ending March 31, official data showed yesterday. That will be below last year’s 6.2 percent pace and the least since a growth of 4 percent in 2002-2003. The S&P CNX Nifty Index fell below 5,900, a key level of support, in the last half-hour of trade, worsening the decline, said Sandip Sabharwal, chief executive officer of portfolio management at Prabhudas Lilladher Pvt.

“The growth outlook looks weak,” he said by phone from Mumbai. “Selling got accentuated after the support was broken. Investors are cautious ahead of next week’s inflation data and the union budget” presentation on Feb. 28, he said.

Cipla sank 3.4 percent to 380.65 rupees, the lowest close since Nov. 20 and the worst performer today on the Sensex. Dr. Reddy’s Laboratories Ltd., the second-biggest drugmaker, slid 2.1 percent to 1,855.4 rupees, the lowest price in a month.

Mahindra & Mahindra slid 1.3 percent to 884.6 rupees, the most since Jan. 18, after December-quarter profit lagged behind estimates for the first time in four quarters. Tata Motors Ltd., the owner of Jaguar Land Rover, lost 1.1 percent to 285.4 rupees, while Maruti Suzuki India Ltd., the country’s biggest carmaker by volume, retreated 2.1 percent to 1,587.7 rupees, the most in two weeks.

Earnings Scorecard

Hindalco Industries Ltd. declined 3.2 percent to 109.7 rupees, the lowest price since Nov. 23. India’s second-largest aluminum maker reported a 3.8 percent drop in third-quarter net income that beat estimates as a weak rupee boosted earnings and income from sources other than operations more than tripled.

Seven out of 21, or 33 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, said in an interview to Bloomberg TV India yesterday. “There’s no recovery in the underlying trend as far as volume, margins and non-performing loans are concerned. The euphoria over reforms drove up stocks. Now, if there has to be a driver it has to be earnings.”

Fund Flows

The Sensex jumped 26 percent last year, the most in three years, as foreign funds bought shares amid government efforts to cut subsidies, allow higher foreign investment in retailing and aviation, and hasten infrastructure projects in a bid to revive economic growth. Overseas funds bought $1.2 billion of equities on Feb. 7, the most since Feb. 23, 2012, extending this year’s purchases to a net $7.13 billion, a record for the period, data compiled by Bloomberg show.

“There is worry that the flows may slow if the market drifts further,” Shankar Char, vice-president at Mumbai-based ICICI Securities Ltd., said by phone. The Nifty index may decline to 5,800, he said.

The Nifty slid 0.6 percent to 5,903.5. India VIX, which measures the cost of protection against losses in the Nifty, rose 1.8 percent to 15.16.

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