Infosys, TCS Lead Sensex Retreat as Global Selloff Deepens

  • Software exporters trade lower tracking Congnizant forecast
  • Stock gauges in Japan tumble 5% as yen strongest since 2014

Indian stocks declined for a second day and the currency weakened as renewed concern about the health of the global economy sparked a worldwide selloff.

Tata Consultancy Services Ltd. and Infosys Ltd., the nation’s largest software exporters, were among the top losers on the benchmark gauge after Cognizant Technology Solutions Corp. forecast lower than estimated revenue for the year. Maruti Suzuki India Ltd.slid to a nine-month low as the Japanese yen reached its strongest since 2014. Dr. Reddy’s Laboratories Ltd. retreated after its third quarter profit and sales missed estimates.

The S&P BSE Sensex declined 1.1 percent at the close in Mumbai, extending Monday’s 1.3 percent tumble, as stock gauges in Japan and Australia plunged and U.S. index futures were little changed amid concerns about slowing global economic growth. Local investors overlooked the government’s forecast of economic expansion this exceeding economists’ estimates this fiscal year as their focus shifted to the federal budget due on Feb. 29.

“The GDP data is a positive in an otherwise gloomy scenario and the earnings growth is more or less been in line with estimates, but we don’t know what is going on in China and in the global economy and how much more pain is yet to be seen,” Gaurang Shah, vice president at Geojit BNP Paribas Financial Services Ltd., said in an interview to Bloomberg TV India. “It’s time to loosen your purse strings but buy gradually, not in one go.”

Nikkei Tumbles

Japan’s Topix index sank 5.5 percent, falling the most since August 24, as banks and financial shares led losses. The Nikkei 225 Stock Average lost 5.4 percent, its biggest decline since June 2013. The Standard & Poor’s 500 Index lost 1.4 percent Monday and the Nasdaq Composite Index approached a bear market. European equities added 0.2 percent after falling for six days in a row.

Overseas funds have pulled out $1.8 billion from Indian equities since Jan. 1, dragging the Sensex down 8 percent and making the rupee Asia’s worst-performing currency this year. They bought $3.3 billion of shares last year, the smallest inflow since 2011, data compiled by Bloomberg show.

Tata Consultancy slid 3.5 percent, the most since Oct. 14. Infosys plunged 3.8 percent, the steepest drop since Nov. 18. Wipro Ltd. fell 1.6 percent, while HCL Technologies Ltd. retreated 4.6 percent. The S&P BSE Information Technology index tumbled the most since August, the worst performer among the 13 sectoral gauges compiled by the BSE Ltd.

Cognizant Outlook

Cognizant, the Teaneck, New Jersey-based company that pays more than a quarter of its costs in rupees, said Monday it expects 2016 revenue to rise 10 to 14 percent, compared with consensus estimates of 14 percent, driven by unpredictable spending in healthcare and financial-services verticals. The stock tumbled the most since August 2014.

“Cognizant’s outlook indicates that demand revival from key customers such as banks, financial services and insurance companies will be delayed more than estimated," Amar Mourya, an analyst with IndiaNivesh Securities Pvt.. said by phone.

Maruti Suzuki decreased 2 percent as the yen strengthened past 115 per dollar for the first time in more than a year and rose against all its major peers. A stronger Japanese currency makes the imports of car parts expensive for Maruti.

Tata Motors Ltd. tumbled 4 percent as deliveries of Jaguar Land Rover in North America climbed 9 percent in January compared with a 30 percent growth in December. The stock has declined 21 percent since Jan. 1, matching last year’s 20 percent loss.

Coal India Ltd., the world’s top producer, slid 4.4 percent in a second day of decline.

Earnings Scorecard

Dr. Reddy’s lost 3.6 percent after it’s third-quarter group net income of 5.8 billion rupees missed the 6.5 billion rupees estimate of 25 analysts. Sun Pharmaceutical Industries Ltd. added 2.2 percent and Lupin Ltd. extended its three-day gain to 15 percent.

So far, 11 out of 20 Sensex firms have posted results for the December quarter that have beaten estimates. Fifty-seven percent of companies posted earnings that matched or beat estimates in September, versus 60 percent in June, data compiled by Bloomberg show.  
The Sensex trades at 14.7 times its projected 12-month earnings, near the cheapest since September, versus a multiple of 10.7 for the MSCI Emerging Markets Index. Most regional markets are closed for the lunar new year.

Markets in mainland China, Hong Kong, South Korea, Malaysia, Singapore and Taiwan are closed for the New Year holiday Tuesday.

Before it's here, it's on the Bloomberg Terminal. LEARN MORE