Indian stocks fell, led by energy companies and lenders, before the expiry of monthly derivatives contracts tomorrow.
Reliance Industries Ltd., the owner of the world’s largest oil-refining complex, retreated the most in three weeks. Bharat Petroleum Corp. slid 3.1 percent, leading other state refiners lower after the government ruled an increase in diesel prices. HDFC Bank Ltd. tumbled 2.8 percent, completing its biggest four-day decline since March 2009.
The S&P BSE Sensex decreased 0.3 percent to 19,856.24 at the close, after changing direction at least 10 times. Volumes were 18 percent below the 30-day average. The Sensex has veered between a one-year low and a 34-month high in the past month. It fell as the rupee slid to a record low in August and rallied after central bank Governor Raghuram Rajan outlined plans to bolster the financial industry and shore up the rupee, and the Federal Reserve maintained its stimulus.
“The market is expected to remain cautious ahead of the derivatives expiry, with indexes moving in a tight range in the absence of major cues to look forward to,” Amar Ambani, head of research at India Infoline Ltd., said by e-mail today.
Reliance, which has the second-highest weighting in the Sensex, dropped 2.9 percent to 849.05 rupees, the biggest fall since Sept. 3. Bharat Petroleum and Hindustan Petroleum Corp. tumbled more than 3 percent after Oil Minister Veerappa Moily said there is no proposal to increase the quantum of the diesel price increase. The S&P BSE India Oil Index slid 1.4 percent, extending a three-day decline.
State-owned refiners sell diesel, kerosene and cooking gas below cost to curb inflation. They are partly compensated by the government and by state-run oil producers that give them discount on crude purchases. The government in January allowed refiners to increase prices of diesel, which accounts for more than 50 percent of all fuels consumed in the country, by half a rupee every month till the deficit on its sale is wiped out.
HDFC Bank declined 2.8 percent to 620.6 rupees, taking the four-day drop to 9.2 percent. ICICI Bank decreased 1 percent to 935.2 rupees. The 13-member S&P BSE Bankex fell 0.9 percent to near a three-week low. ITC lost 1.2 percent to 344.75 rupees, the lowest level in a week. Hindustan Unilever Ltd. dropped 1.5 percent to 633.6 rupees. The two stocks have a combined 15 percent weighting on the Sensex.
The CNX Nifty Index fell 0.3 percent to 5,873.85. Rollovers in Nifty futures were at 47 percent yesterday, compared with 39 percent average of the previous three series, Edelweiss Securities Ltd. said in a report. Indian derivative contracts expire on the last Thursday of the month.
Overseas funds bought a net $5 million of domestic shares on Sept. 24, data from the regulator showed. That extended the year’s net inflow to $13.4 billion, the second-highest among 10 Asian markets tracked by Bloomberg. They withdrew $3.7 billion from local equities in the three months to Aug. 31 as capital fled emerging markets amid prospects of the Federal Reserve paring its record stimulus.
The Sensex has risen 2.2 percent this year in rupee terms and is valued at 13.8 times projected 12-month earnings, data compiled by Bloomberg show. It has lost 10.4 percent this year in dollar terms. The MSCI Emerging Markets Index is trading at 10.6 times, the data show.