Sensex Death Cross Looms as Reliance Leads Fifth Day of Slide

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Indian stocks fell for a fifth day, led by Reliance Industries Ltd., as a technical chart signaled more declines are in store for the $1.5 trillion equity market.

Reliance, owner of the world’s largest refining complex, tumbled the most in four weeks. Vedanta Ltd., the country’s top copper and aluminum producer, and Tata Steel Ltd. were among the worst performers on the S&P BSE Sensex. Tata Motors Ltd. slid to a 10-month low. Nestle India Ltd. tumbled 7.4 percent after capping its worst weekly loss in nine years amid a recall of its Maggi instant noodles.

The S&P BSE Sensex decreased 0.9 percent to 26,523.09, the lowest close since Oct. 20. The measure retreated 3.8 percent last week after central bank Governor Raghuram Rajan said he’d assess the progress of the monsoon rains before adding to three interest-rate cuts this year. Deficient showers would be credit negative for India’s ratings as it would lower farm output and stoke food prices, according to Moody’s Investors Service.

“The credit policy was hawkish and monsoon fears have compounded pessimism,” Vaibhav Sanghavi, managing director at Ambit Investment Advisors Pvt., said by phone from Mumbai. “There are no catalysts for the market in the near term.”

The Sensex’s 50-day moving average fell below the 200-day mean on Monday for the first time in 22 months. The formation, known as a death cross, last occurred on Aug. 16, 2013, when the gauge lost as much as 9.8 percent in less than two weeks before bottoming out, data compiled by Bloomberg show.

Past Pattern

A death cross in March 2011 heralded an 18 percent drop to a 28-month low in December, the data show. The 50-day average for the CNX Nifty was 8,385.29, and the 200-day measure was 8,347.94. The gauge declined 0.9 percent to 8,044.15.

“The market has been falling and when such a pattern is seen, the index may decline further over the next few weeks,” Hemen Kapadia, senior vice president for institutional equities at K.R. Choksey Securities Ltd., said by phone.

Reliance decreased 2.5 percent, the biggest drop since May 12. Vedanta plunged 3.2 percent and Tata Steel lost 2.8 percent to its lowest level since October 2013.

Tata Motors, owner of Jaguar Land Rover, and Bharat Heavy Electricals Ltd., India’s biggest power-equipment maker, fell 1.5 percent each. Sun Pharmaceutical Industries Ltd., the top drugmaker by market value, retreated 2.2 percent.

Nestle India tumbled to its lowest level since Aug. 13 and Hindustan Unilever Ltd. decreased 2 percent to a five-month low.

Glaxo SmithKline Consumer Healthcare Ltd., which makes Horlicks and Boost milk food, dropped 4.3 percent, the most since August 2013. India ordered tests on some of its products in the wake of results showing lead in Nestle’s noodles.

Sun Plunges

Sun TV Network Ltd., a regional satellite broadcaster, tumbled the most in four years on speculation the government will cancel its license amid reports the home ministry denied security clearance to 33 of its channels. The stock plunged 22 percent, the biggest loss since June 2011.

India’s Ministry of Home Affairs rejected a proposal from the Ministry of Information and Broadcasting for the security clearance, citing legal cases pending against members of the network’s founding family, the Press Trust of India reported over the weekend.

“We have no communication from any government official and in the absence of any written communication, I can’t say anything at all,” S.L. Narayanan, chief financial officer at the Sun Group said in an e-mail.

Global investors bought a net $94 million of Indian stocks on June 4, taking this year’s inflows to $7 billion.

The Sensex has dropped 3.6 percent this year and trades at 14.7 times projected 12-month earnings, versus the five-year average of 14.3. The MSCI Emerging Markets Index is valued at a multiple of 11.9.

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