Most Indian stocks fell, with the benchmark index capping its longest losing streak in two months, as Sun Pharmaceutical Industries Ltd. paced declines among its peers.
Sun, Cipla Ltd. and Dr. Reddy’s Laboratories Ltd., three of India’s four biggest health-care companies by value, were the worst performers on the S&P BSE Sensex. Wipro Ltd., a software exporter, slid 2.1 percent and Bharti Airtel Ltd., the largest cell-phone carrier, fell for a fourth day. Hindalco Industries Ltd., an aluminum maker, climbed for the first time in 13 days.
About three shares dropped for every two that rose on the Sensex, which fell 0.2 percent to 26,481.25 at the close after changing direction at least 20 times. The gauge has declined on all days since June 2 after India’s central bank linked further cuts in interest rates to the monsoon. The losses have brought the market “very close to the bottom,” said Brahmaprakash Singh, chief investment officer of equities at Pramerica Asset Managers Pvt.
“Most of the negatives are behind us,” Singh said in an interview with Bloomberg TV India on Tuesday. “The moment we start to get a reasonably good monsoon, the market will return to its growth trajectory.” Singh said he is buying shares of non-state banks and software exporters.
The Sensex’s 3.7 percent decline since Jan. 1, the most among major Asian indexes after Indonesia, has dragged down its valuation to 14.6 times projected 12-month profits. That’s the cheapest since May last year, data compiled by Bloomberg show. The MSCI Emerging Markets Index trades at a multiple of 11.8.
India is facing the prospect of below-average rains for a second straight year. Poor showers would be negative for the nation’s credit ratings as it would lower farm output and stoke food prices, according to Moody’s Investors Service.
Sun Pharma retreated 2.3 percent to its lowest price since Jan. 7, while Dr. Reddy’s tumbled 2.5 percent. Cipla plunged 3.7 percent to its lowest level since Oct. 16 after its rival Mylan Laboratories Ltd. started selling a bioequivalent alternative to GlaxoSmithKline’s Plc’s Seretide under name Sirdupla in U.K.
Mylan’s launch of the asthma drug is “a negative” for Cipla as it doesn’t yet have approval to sell in Britain, Bank of America Merrill Lynch said in a note Tuesday.
Bharti Airtel lost 0.6 percent, paring this year’s gains to 16 percent, the best performer on the Sensex in 2015.
Cairn India Ltd., operator of India’s biggest oil field on land, tumbled to its lowest level since May 2009 following a report Vedanta plans to announce it will absorb the unit.
Absorbing Cairn India will give billionaire Anil Agarwal’s Vedanta access to its unit’s cash and help reduce group debt, The Economic Times reported Tuesday, citing two people it didn’t identify. Cairn India had 168.7 billion rupees ($2.6 billion) of cash and cash equivalents as on March 31, the company said on April 23. The merger process may be completed by March 2016, one of the people said.
Vedanta shares rose 3.1 percent, the best performer on the Sensex, and Hindalco added 1.6 percent, ending a 12-day, 26 percent tumble.
Foreign investors sold a net $115 million of Indian stocks on Monday, June 8, paring this year’s inflows to $6.85 billion.