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Indian Stocks Retreat, End Four-Day Advance; Hero Leads Decline

March 11 (Bloomberg) -- Indian stocks fell for the first time in five days as some investors judged last week’s advance may have exceeded the outlook for interest rate cuts by the central bank.

The S&P BSE Sensex lost 0.2 percent to 19,646.21 at the close, with volumes 15 percent below the 30-day average. Hero Motocorp Ltd., India biggest motorcycle maker, dropped for the first time in five days, the worst performer on the gauge. Tata Consultancy Services Ltd., the nation’s largest software maker, declined for a second day, pacing losses among its peers.

The Sensex jumped 4 percent last week, its steepest weekly gain since November, amid speculation the Reserve Bank of India will reduce borrowing costs at its March 19 meeting. Wholesale prices climbed 6.6 percent in February, the least in 39 months, according to a Bloomberg survey before the data’s release later this week. Industrial-output data for January is due tomorrow.

“The markets have taken a breather after a terrific rally last week,” Kaushik Dani, a fund manager with Peerless Mutual Fund, which has $867 million in assets, said by telephone from Mumbai. “Factory output and inflation data will be closely watched before RBI’s policy meeting next week.”

The Sensex fell for five straight weeks through March 1, reaching a three-month low on Feb. 28, as profits at companies from Tata Motors to State Bank of India trailed estimates for the December quarter and a government report showed that the pace of economic growth in the final three months of 2012 was the weakest in almost four years.

Hero lost 2.6 percent to 1,697.45 rupees. Jindal Steel & Power Ltd., the nation’s second-biggest steelmaker by value, slid 1.1 percent to 363.15 rupees.

Technology Stocks

Tata Consultancy retreated 1.1 percent to 1,566.2 rupees. The stock climbed to a record on March 7. Infosys Ltd., the second-largest software exporter, fell 0.8 percent to 2,945.75 rupees. Wipro Ltd., the third-biggest, lost 1.3 percent to 439.55 rupees. The three stocks have a combined 16 percent weighting in the Sensex.

The CNX Nifty Index of the National Stock Exchange of India Ltd. decreased 0.1 percent to 5,942.35 while its March futures settled at 5,957.40. India VIX, which measures the cost of protection against losses in the Nifty, jumped 6.8 to 14.25.

The Sensex is valued at 13.9 times projected 12-month profits, compared with 14.3 times on Jan. 25, when the gauge climbed to a two-year high, data compiled by Bloomberg show. That compares with the MSCI Emerging Markets Index’s 10.8 times.

Overseas funds bought a net $127 million worth of stocks on March 7, taking their net investment in local equities this year to $8.73 billion, a record for the period, data compiled by Bloomberg show. They bought a net $24.5 billion worth of shares last year, the most among 10 Asian markets tracked 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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