Indian stocks dropped for a third day this week in volatile trading amid concern company earnings will lag analyst estimates.
State Bank of India fell for a second day and HDFC Bank Ltd., the most valuable lender, pared gains of as much as 1.3 percent. Tata Motors Ltd. declined to a three-month low. Sun Pharmaceutical Industries Ltd., the biggest drugmaker by value, was the worst performer on the S&P BSE Sensex.
The Sensex declined 0.6 percent to 27,735.02 at the close after changing direction at least six times. The gauge climbed from a three-week low on Wednesday after India offered overseas investors treaty benefits to defuse a row over back-taxes that cast a cloud over $48 billion in inflows. The index retreated 4.7 percent in five days through Tuesday amid concerns that net income growth of the 30 Sensex firms will decline for a second straight quarter.
“Any upmove will be met with selling as there’s lots of earnings and we enter the expiry mode next week,” Gaurang Shah, a vice president at Geojit BNP Paribas Financial Services Ltd., told Bloomberg TV India on Thursday. “The markets will remain choppy” before monthly derivative contracts lapse next Thursday, he said.
Sensex company profits for the three months ended March 31 period will probably decline for a second quarter, estimates compiled by Bloomberg show. UBS AG cut its December target for the 50-stock CNX Nifty index by 4 percent on Monday, citing a slowdown in profit growth.
Macquarie Capital Securities India Pvt., the most accurate index forecaster for the past two years in Bloomberg surveys, trimmed its earnings forecast for the 30 Sensex companies by 2.2 percent for the year through March 2016.
State Bank plunged 2.2 percent and HDFC Bank was little changed at 1,013.5 rupees. HDFC’s fiscal fourth-quarter profit rose 21 percent to 28.1 billion rupees ($450 million), almost matching the 28.2 billion rupees estimated by analysts.
Tata Motors lost 2.2 percent to 512 rupees in a fifth day of losses, the longest losing stretch since the period ended Dec. 17. Mahindra & Mahindra Ltd., the largest tractor maker, fell for the first time in three days.
Wipro Ltd., the third-biggest software exporter, dropped 1.9 percent to the lowest level in 10 months.
NTPC Ltd., the biggest power producer, lost 2.1 percent and Sun Pharma retreated 2.7 percent.
The Sensex has risen 0.9 percent and is valued at 15.4 times projected 12-month profits, compared with the MSCI Emerging Markets Index’s multiple of 12.6.
Global investors sold a net $135.8 million of local shares on April 22, paring the year’s inflows to $8.4 billion. They bought $16 billion of stocks last year.