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Indian Stocks Drop to Five-Week Low on Inflation, Factory Data

Nov. 13 (Bloomberg) -- Indian stocks declined, sending the benchmark index to a five-week low, after consumer prices rose more than forecast and factory output growth missed estimates.

HDFC Bank Ltd. slid to a five-week low, pacing losses in a gauge of lenders, which fell for an eighth day. Copper producer Sesa Sterlite Ltd. dropped for a third day. Sun Pharmaceutical Industries Ltd. and Tata Steel Ltd. climbed before their quarterly earning reports.

The S&P BSE Sensex lost 0.4 percent to 20,194.40, the lowest close since Oct. 8, after swinging between gains and losses at least 15 times. Retail inflation quickened to 10.09 percent last month, the fastest in a basket of 17 Asia-Pacific economies tracked by Bloomberg, even as economic growth slows to a decade low, data released after markets closed yesterday showed. Factory output climbed 2 percent in September, another report showed, less than the median estimate of 3.5 percent in a separate survey.

India’s economy is “still not out of the woods,” Andrew Holland, chief executive officer at Ambit Investment Advisors Pvt. in Mumbai, told Bloomberg TV India today. “We’re seeing nervousness in other emerging nations with twin deficits and high inflation. India is part of that problem.”

Wholesale price inflation likely accelerated 6.95 percent in October from 6.46 percent in September, according to the median of 40 estimates in a survey before data due tomorrow.

HDFC Bank fell to its lowest level since Oct. 8. Shares of Union Bank of India and IndusInd Bank Ltd. dropped at least 2.5 percent. The S&P BSE India Bankex retreated for an eighth day, the longest stretch of losses since November 2011.

Bad Loans

State Bank of India Ltd. added 1.4 percent, ending six days of losses, even as the nation’s biggest lender reported a bigger drop in second-quarter profit than analysts estimated. The lender increased its bad loan provisions to 26.5 billion rupees from 18.4 billion rupees. Still, the rise “was lower than what investors expected,” Vishal Narnolia, Mumbai-based analyst at SMC Global Securities Ltd., said by phone.

Sun Pharmaceutical rose 1.7 percent to its highest level since Nov. 3. Tata Steel gained 1.5 percent, paring this year’s loss to 17 percent.

Net incomes at 20 of the 27 companies in the Sensex that have reported results exceeded analyst estimates, according to data compiled by Bloomberg. About 47 percent of the 30 index members missed forecasts in the previous quarter.

Rupee Performance

The Sensex has declined every day since climbing to an all-time high on Nov. 3 and the rupee is the worst-performing currency in Asia in the past month as signs the U.S. economy is gathering momentum underpinned the case for the Federal Reserve to trim its asset purchases. The stimulus helped spur $2.9 billion of net inflows into local shares last month.

“The one thing that is spooking people is what happens when tapering ends,” Ambit’s Holland said. “Investors are sitting on the sidelines to see what impact it has on developed and emerging markets.”

Asian stocks fell today as U.S. corporate earnings and an improving economy fueled speculation about the Fed’s timetable for reducing stimulus. Fed Bank of Atlanta President Dennis Lockhart said yesterday a reduction in U.S. bond purchases “could very well take place” next month.

Global funds bought a net $59.2 million of local shares on Nov. 12, a 27th day of purchases, the longest consecutive inflow since the 35 days through Feb. 15.

The CNX Nifty Index decreased 0.5 percent to 5,989.60. The India VIX fell 2 percent.

The BSE and the National Stock Exchange will close on Nov. 15 for Muharram. The bourses had previously declared Nov. 14 a trading holiday.

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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