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Indian Stocks Extend Five-Week Losing Streak; Metals, Autos Drop

March 4 (Bloomberg) -- India’s benchmark stock index fell, extending its five-week losing streak, after foreign investors sold the most local shares in about a year as economic growth falters. Metal producers and automakers led the decline.

The S&P BSE Sensex index lost 0.2 percent to 18,877.96 at the close. Sterlite Industries (India) Ltd., the nation’s top copper maker, dropped for a third day after it lowered prices. Bajaj Auto Ltd. slid 1.9 percent as sales declined in February.

Overseas funds sold $237 million of stocks on Feb. 28, the highest since March 29, after the budget presented by Finance Minister Palaniappan Chidambaram disappointed investors. The Sensex dropped 1.5 percent that day. Foreign funds have still bought a net $8.4 billion of local shares this year, compared with a net $24.5 billion in 2012, which was the highest among 10 Asian markets tracked by Bloomberg.

“We’ll see liquidity abating at some point and that is the central risk for markets,” P. Phani Sekhar, a fund manager at Angel Broking Ltd. in Mumbai, said by phone. “The economic slowdown didn’t happen overnight and it’s not going to go away overnight. It’s too early to play recovery stocks.”

India targets a fiscal deficit of 4.8 percent of gross domestic product in the year from April 1, and posted a 5.2 percent gap in 2012-2013, Chidambaram said on Feb. 28. He set aside 330 billion rupees ($6.1 billion) for the rural jobs program and 100 billion rupees for a plan to give the poor food grains, before elections next year. That raised concern the 4.8 percent fiscal-gap goal may not be met.

GDP Data

India’s economy grew 4.5 percent in the three months ended December from a year earlier, the weakest pace in almost four years, government data showed hours after Chidambaram presented the budget. Profits at 43 percent of the Sensex firms trailed estimates in the December quarter, compared with 40 percent in the previous two quarters, data compiled by Bloomberg show.

Sterlite tumbled 2.8 percent to 90.45 rupees, the lowest close since June 5. Copper prices were cut to 452,591 rupees ($8,209) a metric ton in March, it said in a statement on its website. Aluminum maker Hindalco Industries Ltd. plunged 4.7 percent to 94.35 rupees. The S&P BSE Metal Index dropped 2.5 percent, the most among 13 industry indexes of the BSE Ltd. The gauge closed at its lowest level since May 2009.

Bajaj Auto slumped 1.9 percent to 1,989.2 rupees. Sales fell 3.3 percent to 332,387 units last month, the company said in an exchange filing today. Maruti Suzuki India Ltd., the nation’s biggest carmaker, lost 1.8 percent to 1,398.75 rupees.

Sensex Valuation

The Sensex fell 2.1 percent last week, the most since the five-day period ended May 11. The gauge trades at 13.4 times projected 12-month profits, compared with 10.1 times for the MSCI Emerging Markets Index, data compiled by Bloomberg show.

The S&P BSE Small-Cap Index slid 1.9 percent to 6,078.12, taking its decline from a 17-month high reached on Jan. 7 to 21 percent. The S&P BSE Mid-Cap Index lost 1.4 percent.

Asian stocks dropped, with the regional benchmark index heading for its second day of declines, after China tightened mortgage rules to cool the property market. The MSCI Asia Pacific Index fell 0.8 percent. China’s Shanghai Composite Index plunged 3.7 percent.

The S&P CNX Nifty Index of the National Stock Exchange of India slid 0.4 percent to 5,698.50. India VIX, which measures the cost of protection against losses in the Nifty, tumbled 2.8 percent to 13.67.

Foreign funds have been net sellers in two of the past 13 years, based on data compiled by Bloomberg going back to 2000.

To contact the reporter on this story: Shikhar Balwani in Mumbai at sbalwani@bloomberg.net

To contact the editor responsible for this story: Darren Boey at dboey@bloomberg.net

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