Most Indian stocks dropped, with the benchmark index holding at a five-week high, led by shares of lenders and capital goods’ producers.
Sixteen shares fell and 14 climbed on the S&P BSE Sensex, which increased less than 0.1 percent to 19,179.36, its highest close since March 18. The gauge has rallied 5.1 percent since April 12 amid optimism slowing inflation and lower commodity prices may prompt the central bank to cut borrowing costs next week. State Bank of India, the nation’s biggest lender, slid for the first time in nine days. Engineering company Larsen & Toubro Ltd. lost 1.9 percent after posting its biggest two-day gain since September. Reliance Industries Ltd., the owner of the world’s largest refining complex, rose for the third day.
Overseas funds bought a net $292.1 million worth of Indian equities last week, the biggest inflow in five, data compiled by Bloomberg show. That helped the Sensex advance 4.2 percent in its biggest weekly rally since the period ended Nov. 30. The rally pushed up the gauge’s valuation to 12.9 times projected 12-month profits, the highest reading since March 19, according to data compiled by Bloomberg. Foreigners purchased a net $152 million of stocks yesterday, the data show.
“The markets are slightly in overbought territory,” said Alex Mathews, head of research at Geojit BNP Paribas Financial Services Ltd. at Kochi in southern India. “Purchases by foreign investors are providing good support.”
Larsen slid 1.9 percent to 1,504.7 rupees after rallying 7.7 percent in the past two days. State Bank shed 1.7 percent to 2,287.5 rupees, ending an eight-day 17 percent rally. HDFC Bank Ltd., India’s second-largest private lender, dropped 1.3 percent to 689 rupees. The lender’s fourth-quarter profit rose 30 percent to 18.9 billion rupees ($347.7 million), matching the median of 37 analyst estimates in a Bloomberg survey.
The S&P BSE Bankex index of 14 lenders fell 0.3 percent, ending an eight-day rally.
Reliance Industries increased 1.8 percent to 803.7 rupees. Sun Pharmaceutical Industries Ltd., the nation’s most valuable drugmaker, surged 2.5 percent to a record 949.95 rupees. Hero MotoCorp Ltd., India biggest motorcycle maker, rose 2.7 percent to 1,573.6 rupees.
Stocks rose last week after data showed wholesale prices slowed to a 40-month low of 5.96 percent in March, and slumping oil and gold prices cut import costs for the two commodities that fueled a record $32.6 billion current-account deficit in the December quarter.
The gap, along with a consumer-inflation rate that exceeds 10 percent, has deterred the Reserve Bank of India from making further reductions to interest rates after 25 basis-point cuts in January and March. The RBI may pare its key rate by another 25 basis points at a May 3 review, according to 14 of 16 economists surveyed by Bloomberg.
Finance Minister Palaniappan Chidambaram said a further cut in interest rates by the central bank would help revive economic growth. Chidambaram made the comments in an April 19 interview from Washington, where he was attending meetings of the International Monetary Fund and the World Bank.
The South Asian economy grew 4.5 percent from a year ago in the final three months of 2012, the weakest pace in almost four years. The statistics bureau predicts an annual expansion of 5 percent in the year ended March 31, the lowest in a decade.
Profit at five Sensex companies that have reported March quarter results so far has either matched or beaten analysts’ estimates. Net income at about 43 percent of the 30 Sensex firms trailed forecasts in the three months ended Dec. 31, compared with 40 percent in the previous two quarters.
“It’s too early to say earnings are going to pick-up,” Pankaj Pandey, head of research at ICICI direct.com, said in an interview to Bloomberg TV India yesterday. “It’s time to be cautious on the market. I don’t think one needs to be aggressive” after last week’s advance, he said.
Tata Motors Ltd., the owner of British luxury car brands Jaguar and Land Rover, lost 1.3 percent to 281.5 rupees, ending a four-day rally. Bharat Heavy Electricals Ltd., the largest power-equipment maker, fell 1.4 percent to 188.7 rupees. The stock climbed 7.3 percent in the previous four days.
Volumes on the Sensex were 26 percent less than the 30-day average. The 50-stock CNX Nifty Index on the National Stock Exchange of India rose less than 0.1 percent to 5,836.90. India VIX, which gauges the cost of protection against losses in the Nifty, tumbled 7.1 percent to 15.07.
The markets are closed tomorrow for a public holiday.