India’s benchmark stock-index declined by the most in two weeks as metal producers and consumer companies fell before the expiry of monthly derivatives on Thursday.
Vedanta Ltd., the nation’s largest copper and aluminum refiner, slid to a six-week low, and Tata Steel Ltd. retreated to the lowest price since April 6. ITC Ltd. decreased to an 11-month low after its quarterly profit missed estimates. Tata Power Co. lost 1.5 percent after the BSE Ltd. said the stock will be dropped from the S&P BSE Sensex starting June 22.
The Sensex lost 1.1 percent to 27,643.88, the most since May 12. The gauge rose to a five-week high on Friday as bets mounted that slowing inflation will give the central bank room to ease monetary policy next month. While 52 percent of the Sensex members that have posted results for the March quarter have exceeded or matched estimates, earnings will fall for a second quarter, forecasts compiled by Bloomberg show. The index trades at 15.3 times projected 12-month profits, compared with the MSCI Emerging Markets Index’s multiple of 12.3.
“The valuations are extended as expectations of corporate earnings are low,” Chakri Lokapriya, chief investment officer at TCG Advisory Services Pvt., said by phone from Mumbai. The market “may consolidate a bit more in the near term,” he said.
ITC’s fourth-quarter earnings rose 3.5 percent to 23.6 billion rupees ($372 million) from a year earlier, trailing the 25.2 billion rupees estimated in a Bloomberg survey. The stock tumbled 2.4 percent. Results were announced after market hours on Friday.
The 50-stock CNX Nifty Index lost 1.1 percent, while the India VIX Index posted a fourth day of losses, the longest run since the period ended April 30. Stock derivative contracts in India expire on the last Thursday of every month.
The Sensex completed its third weekly gain on Friday, the longest run since March, amid bets that Reserve Bank of India Raghuram Rajan would cut interest rates for a third time this year at the June 2 review. While consumer prices slowed to a four-month low in April, factory output grew 2.1 percent versus an estimated 3 percent rise, official data showed May 12.
“Economic growth is relatively moderate and it needs a boost,” Jim Walker, managing director of Asianomics Group Ltd., said in an interview with Bloomberg TV India today. “The RBI should take a signal and lower rates.”
International investors sold a net $28 million of Indian stocks on May 21, paring this year’s inflows to $6.8 billion. The Sensex has risen 0.5 percent this year and trades at 15.3 times projected 12-month earnings, compared with the MSCI Emerging Markets Index’s multiple of 12.3.