Indian stocks declined the most in three weeks amid concern the recent rally in the benchmark index may have outpaced the outlook for company earnings.
Bharat Heavy Electricals Ltd., the biggest power-equipment maker, was the worst performer on the S&P BSE Sensex. Mahindra & Mahindra Ltd., India’s largest tractor maker, and Tata Motors Ltd. slid at least 2.5 percent. Sun Pharmaceutical Industries Ltd. tumbled for the first time in three days. Tata Consultancy Services Ltd., the largest software exporter, declined before its earnings on Thursday.
The Sensex lost 0.8 percent to 28,799.69, with bulk of the losses coming in last half-hour of trading. The gauge capped a second weekly gain on Friday after the nation’s credit rating outlook was upgraded to positive by Moody’s Investors Service. The index is valued at 16.1 times projected 12-month earnings, versus its five-year average of 14.4.
“The macro story is looking interesting, but valuations are fairly toppish now,” Sanjeev Prasad, the Singapore-based co-head and senior executive director at Kotak Institutional Equities, said in an interview with Bloomberg TV India today. “Markets won’t get rerated without earning upgrades. If anything, we’re going to see some downgrades in the next two quarters.”
Indian strategists are cutting forecasts for the Sensex for the first time in six quarters, while estimates for fiscal 2016 profits have dropped 5 percent since the end of December. Earnings-per-share for Sensex companies decreased in the three months ended December for the first time in six quarters, data compiled by Bloomberg show.
Tata Consultancy Services and Reliance Industries Ltd., the owner of the world’s largest refining complex, are due to announce March-quarter earnings this week.
Bharat Heavy tumbled 4.2 percent, the most since March 9. Mahindra & Mahindra retreated 3.1 percent and Tata Motors slid 2.8 percent.
Tata Consultancy lost 1.1 percent. The company may say Thursday fourth-quarter profit climbed 1.6 percent to 53.9 billion rupees ($863 million) from a year earlier, according to the median estimate of 30 analysts in a Bloomberg survey.
Infosys Ltd., the second-largest software exporter, slid 1.1 percent and Wipro Ltd., the third-biggest, decreased 2.8 percent. HCL Technologies Ltd. plunged 3.2 percent.
Gujarat Gas Co. soared 11 percent, the most since Dec. 23, after it won the regulator’s approval to start operations in Thane city, near Mumbai.
Foreigners bought a net $73.5 million of local shares on April 13, taking this year’s inflows to $6.34 billion, the most among eight Asian markets tracked by Bloomberg.
Markets in India were closed yesterday for a holiday.