Indian Stocks Pare Weekly Loss as Defensives Climb on Expiry Day

  • Infosys, Lupin, ITC among best performers in volatile trading
  • Global funds pull $611 Million from local shares in September

Advances in software makers and consumer companies helped India’s benchmark stock gauge eke out a gain in volatile trading even as metal producers and energy companies declined before the central bank’s policy review next week.

Tata Consultancy Services Ltd., Infosys Ltd. and Wipro Ltd., the nation’s biggest technology companies, were among the top performers on the S&P BSE Sensex. ITC Ltd., the largest cigarette company, rose to a three-week high, while Maruti Suzuki India Ltd. rallied to a one-month high. Oil & Natural Gas Corp. retreated the most in a month, while Reliance Industries Ltd., owner of the world’s largest refining complex, slid to its lowest price in two weeks.

The Sensex added 0.2 percent to 25,863.50 at the close Thursday, after fluctuating between a gain of 0.5 percent and a loss of 0.6 percent. The gauge fell 1.4 percent this past week, ending a two-week rally, as investors look ahead to whether the Reserve Bank of India will cut interest rates on Sept. 29 to boost the economy and spur a recovery in company earnings. Twenty-six of 32 economists in a Bloomberg survey expect the RBI to cut the rate by 25 basis points, five expect a hold and one predicting a 50 basis-point reduction.

“While a 25 basis point cut is a given, I won’t be surprised if the RBI cuts by 50 basis points as the Fed has deferred its rate increase," Deven Choksey, managing director at brokerage K.R. Choksey Shares & Securities Pvt., said in an interview with Bloomberg TV India on Thursday. “The market has absorbed most of the selling. It may show more stability next month than what we saw in August and September.”

RBI Watch

RBI Governor Raghuram Rajan left the main rate unchanged at 7.25 percent in August after three reductions in 2015, rebuffing calls from the government to cut one of Asia’s highest borrowing costs. Finance Minister Arun Jaitley on Monday repeated the need for lower interest rates and said sectors including real estate and infrastructure were anxiously waiting for the central bank to ease monetary policy.

The Sensex has fallen 1.6 percent so far in September, extending last month’s 6.5 percent slump, amid waning demand for riskier assets. Foreigners pulled a net $195 million from local shares on Wednesday, Sept. 23, taking the month’s withdrawals to $611 million. That’s on top of the $2.6 billion they took out in August, the most since October 2008.

Nifty Rollover

The 50-stock Nifty index added 0.3 percent to 7,868.50. Traders extended 56 percent of the September contracts, according to data available as of 5 p.m. in Mumbai, compared with a six-month average of 65 percent. The India VIX index, the benchmark gauge of equity-option prices, rose 0.9 percent to 20.9.

Infosys gained 2.2 percent to its highest since Aug. 21 and Wipro Ltd. rose 2.1 percent. Maruti Suzuki India Ltd. climbed 1.5 percent, taking this year’s rally to 37 percent.

Lupin Ltd. rallied to a five-month high after Credit Suisse Group AG upgraded its rating on the drugmaker. The stock has climbed 39 percent this year, the best performance on the Sensex.

ONGC plunged 3.8 percent, the most since Aug. 24. Reliance fell 1.5 percent. Larsen & Toubro Ltd., the nation’s most valuable engineering company, slid 2.2 percent to its lowest level since last Oct. 17. Tata Motors Ltd., owner of Jaguar Land Rover, also decreased 2.2 percent. The stock fell 8.1 percent this past week, the worst performer on the Sensex this week.

The Sensex has decreased 6 percent this year and is valued at 14.7 times projected 12-month earnings. The MSCI Emerging Markets Index is valued at a multiple of 10.4. The market is closed on Friday for a public holiday.

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