Indian stocks fell for the first time in five days as some investors judged recent gains that drove the benchmark index to a six-week high as excessive.
The S&P BSE Sensex slid 0.6 percent to 19,286.72 at the close in Mumbai, after climbing to its highest level since March 15 yesterday. It rose 1.4 percent this week, a second week of gains. ICICI Bank Ltd., India’s largest private lender, ended an 11-day winning run after reporting earnings that met analysts’ estimates. Jindal Steel & Power Ltd. closed at its lowest level in almost four years as profit slumped 35 percent.
The Sensex has rebounded 5.8 percent from a seven-month low on April 9 as slowing wholesale-price inflation and a drop in prices of gold and oil stoked speculation the central bank will lower rates next week. The rally drove up the measure’s valuation to 13 times projected 12-month profits yesterday, the highest in almost six weeks, data compiled by Bloomberg show.
“There is a chance that we see the markets correct ahead of the Reserve Bank of India policy as there’s a lot of profit to be taken” from the recent rally, Sajiv Dhawan, managing director at brokerage JV Capital Services, said in an interview with Bloomberg TV India. “We expect to see profit-booking.”
The RBI may trim its key rate by 25 basis points at a May 3 review, according to a Bloomberg News survey.
ICICI Bank retreated 2.8 percent to 1,144.50 rupees after rising for 11 days, the stock’s longest winning run since Sept. 20, 2005. Net income climbed 21 percent to 23 billion rupees ($424 million) in the March quarter, matching the 22.91-billion rupee estimate in a Bloomberg survey. State Bank of India slid 2 percent to 2,287.95 rupees.
Jindal Steel, India’s second-biggest maker of the alloy, slumped 4.3 percent to 314.95 rupees, its lowest close since May 2009. Fourth-quarter group profit dropped to 7.6 billion rupees, the company said after the close of markets yesterday. That missed the 9.7-billion rupee median estimate in a Bloomberg survey of 18 analysts.
Maruti Suzuki India Ltd., the nation’s largest carmaker, climbed 5.2 percent to 1,673.15 rupees, its highest close since September 2009, after quarterly profit nearly doubled to 12.4 billion rupees. Motorcycle maker Hero MotoCorp Ltd. reported fourth-quarter net income of 5.74 billion rupees, beating the 5.02-billion rupee median estimate in a Bloomberg survey. The stock slid 1.3 percent to 1,596.85 rupees before the results, which were announced after the markets closed.
Profit at just one of the nine Sensex companies that have reported March-quarter results has trailed analyst estimates. Net income at about 43 percent of the 30 index firms trailed forecasts in the three months ended Dec. 31, compared with 40 percent in the previous two quarters.
Bharti Airtel Ltd., India’s largest mobile-phone operator, rallied 4.8 percent to 318.45 rupees, its highest close since March 11. Shares climbed as rival Idea Cellular Ltd., which is not a Sensex member, posted better-than-expected fourth-quarter results yesterday.
Idea closed 5.1 percent higher at 122.40 rupees, more than a three-month high. The stock jumped 11 percent intraday. Group profit rose to 3.08 billion rupees, beating the 2.67-billion rupee median of analyst estimates in a Bloomberg survey. The stock was upgraded to outperform at Credit Suisse Group AG.
Bharti’s gains are “the result of a herd mentality within the sector,” Vineet Bhatnagar, managing director at PhillipCapital India Pvt., told Bloomberg TV India. “People expect Bharti also to report better-than-expected results.”
Bharti is scheduled to report earnings on May 2.
Overseas funds were net buyers of $84 million of Indian stocks on April 23, taking this year’s net investment to $10.7 billion, a record for the period, according to data compiled by Bloomberg. Funds bought a net $292.1 million worth of equities last week, the most in five weeks, on prospects of a rate cut by the central bank. That helped the Sensex rally 4.2 percent, the most since the week ended Nov. 30.
India’s inflation slowed to a 40-month low of 5.96 percent in March, government data showed April 15. A current-account deficit that widened to a record $32.6 billion in the December quarter, along with elevated prices, has deterred the RBI from further reducing borrowing costs after 25 basis-point cuts in January and March.
The 50-stock CNX Nifty Index on the National Stock Exchange of India slid 0.8 percent to 5,871.45 while its May futures traded at 5,889. India VIX, which measures the cost of protection against losses in Nifty, fell 2.3 percent to 13.88 in a third day of losses.