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Indian Stocks Drop Most in Two Weeks as Software Exporters Fall

Oct. 17 (Bloomberg) -- Indian stocks declined, with the benchmark index retreating the most in two weeks. Technology companies and capital goods makers led the retreat.

Tata Consultancy Services Ltd., Asia’s largest software exporter by market value, and HCL Technologies Ltd. fell from records even as their profits exceeded estimates. Engineering company Larsen & Toubro Ltd. had the biggest fall in a month. Tata Motors Ltd. slid the most in two months.

The S&P BSE Sensex lost 0.6 percent to 20,415.51 at the close. The gauge rebounded 15 percent from the year’s low on Aug. 21 through Oct. 14, led by exporters on optimism a weak rupee will boost the value of their repatriated profits. Net incomes at all five Sensex companies that have posted earnings for the three months ended September so far have exceeded or matched estimates. About 47 percent of the 30 companies in the index missed forecasts in the previous quarter.

“Investors booked profits in software stocks after the good results the rally in the run up to the earnings has been sharp,” Chokkalingam G, chief investment officer at Centrum, which oversees 1.4 billion rupees, said by phone. “Earnings have been better than expected until now. What remains to be seen is how it pans out for the rest of the season.”

Tata Consultancy lost 4.8 percent, the biggest drop since Sept. 17, 2012. The company exceeded analyst estimates Oct. 15, posting a profit of 47 billion rupees ($760 million). The stock is valued at 21 times estimated profit for the next 12 months, versus a five-year average of 18 times.

HCL, Infosys

HCL Technologies plunged 6.7 percent, the most since Oct. 11, 2011. First-quarter net income jumped 64 percent to 14.2 billion rupees. The stock has climbed 75 percent this year. The 10-member S&P BSE Infotech index fell 3.6 percent, sliding from a record on Oct. 15.

Infosys Ltd., India’s second-largest software maker, slid 2 percent, ending a seven-day, 11 percent rally. The company raised its annual sales forecast on Oct. 11 amid rising demand from its U.S. and European clients for outsourced services.

Larsen & Toubro declined 4 percent to 836.90 rupees. Tata Motors also plunged 4 percent to 373.40 rupees, retreating for the second day from a record on Oct. 14.

The World Bank yesterday reduced India’s economic growth forecast for the year ending March 2014 to 4.7 percent from 6.1 percent and said it expects the gross domestic product to “rebound strongly” in the second half of the fiscal year, helped by higher farm output and increased exports.

Debt Deal

The MSCI Asia Pacific Index rose to five-month high after U.S. President Barack Obama signed into law a measure ending the 16-day government shutdown and raising the country’s debt limit, improving the outlook for emerging markets.

Global funds bought a net $186 million of Indian stocks on Oct. 15, taking this year’s inflow to $14.5 billion, data from the regulator show.

The Sensex has risen 5.1 percent this year and is valued at 14 times projected 12-month profits, compared with the 10.8 times for the MSCI Emerging Markets index.

The CNX Nifty Index decreased 0.7 percent to 6,045.85. The India VIX, which gauges the cost of protection against losses in the Nifty, plunged 9.4 percent.

To contact the reporter on this story: Rajhkumar K Shaaw in Mumbai at rshaaw@bloomberg.net

To contact the editor responsible for this story: Michael Patterson at mpatterson10@bloomberg.net

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