- Metal, energy shares decline; Coal India rises before results
- Consumer prices accelerate in challenge to monetary policy
Indian stocks tumbled, with the benchmark index declining for a third consecutive week, after inflation accelerated and a rout in commodities dragged down Asian equities.
Vedanta Ltd., the nation’s largest copper producer, sank to a five-week low and aluminum producer Hindalco Industries Ltd. declined for a fourth week. Oil & Natural Gas Corp., the largest state-owned oil explorer, decreased 3.4 percent. Tata Consultancy Services Ltd., India’s most valuable company, slid to its lowest close this year.
The S&P BSE Sensex tumbled 1 percent to 25,610.53 at the close in Mumbai. India’s consumer prices rose 5 percent in October from a year ago after a 4.41 percent increase in September, challenging central bank Governor Raghuram Rajan’s accommodative policy stance before he reviews interest rates a final time this year on Dec. 1. The MSCI Asia Pacific Index slid 1 percent as U.S. oil lingered below $42 a barrel and copper futures traded near a six-year low amid concerns over China’s slowdown.
“In the near term, the worries remain more on the global cues: First is how the U.S. Fed policy moves and the second is how the Chinese economy shapes up because that will have an impact on commodity prices,” Hemant Kanawala, the head of equities at Kotak Mahindra Old Mutual Life Insurance Ltd., which oversees about $2 billion in assets, said in an interview with Bloomberg TV India. “If there is weakness globally and a risk off, then India will be impacted by it.” The money manager is overweight on shares of oil refiners, private-sector lenders and automakers.
The Sensex rose 0.5 percent in a special one-hour trading session for Diwali on Wednesday, with stock markets closed for regular trading on Wednesday and Thursday. The gauge has slumped 2.5 percent this week, completing a third weekly loss after Prime Minister Narendra Modi’s Bharatiya Janata Party lost state elections in Bihar, India’s third-most-populous state. The defeat has raised concern that his ability to push through policies to strengthen the economy will be hampered.
U.S. equities accelerated losses on Thursday after the normally dovish New York Federal Reserve President William Dudley said the central bank may need to begin tightening policy. Fed President James Bullard of St. Louis earlier in the day urged raising target rates, while Chicago Fed leader Charles Evans stressed any increases should be “gradual.”
Vedanta tumbled 4.1 percent to its lowest level since Oct. 6. Hindalco lost 3.6 percent, taking this week’s drop to 4.3 percent. Oil & Natural Gas’s decline took this year’s plunge to 33 percent. Tata Consultancy retreated 2.9 percent toward its lowest since Dec. 15.
Coal India Ltd. gained 2.9 percent before the company’s fiscal second-quarter earnings report due Friday. The world’s biggest miner of the fuel will probably report a 25 percent increase in net income to 27.4 billion rupees ($414 million), according to the average of 24 analyst estimates in a Bloomberg survey.
Fifty-nine percent of Sensex companies that have posted results for the July-to-September quarter so far have matched or beaten estimates, versus 60 percent in June, data compiled by Bloomberg show.
International investors sold a net $106 million of Indian stocks on Nov. 9, paring this year’s inflows to $4.3 billion. The Sensex trades at 15.1 times projected 12-month earnings, compared with a multiple of 11 for the MSCI Emerging Markets Index.