India’s Sensex Completes Weekly Decline as Overseas Funds Sell

Indian stocks fell for the third day after sale of shares by overseas funds for three straight days weakened the outlook for the nation’s equities.

The S&P BSE Sensex index slid 0.3 percent to 18,450.23 at the close in Mumbai, taking the week’s loss to 2.1 percent. ITC Ltd., India’s largest cigarette producer, fell the most since December 2012. Housing Development Finance Corp., the largest mortgage lender, retreated 2.7 percent.

Foreigners sold a net $45.4 million of Indian shares on April 4, a third day of net outflows, data from the regulator show. Overseas investors are paring this year’s record equity purchases as sales of goods from cars to cement drop amid the slowest economic growth in a decade, a record current-account deficit and the fastest inflation among major emerging nations. Net income at about 43 percent of the 30 Sensex firms trailed forecasts in the three months ended Dec. 31, compared with 40 percent in the previous two quarters.

“At the end of the day, investors are not buying gross domestic product growth, they’re buying earnings growth and there are no meaningful legs in the earnings story,” Arvind Sanger, managing partner at Geosphere Capital Management LLC., told Bloomberg TV India today. “Earnings estimates for fiscal 2014 are unlikely to be raised.”

ITC slid 2.8 percent to 291.3 rupees, the lowest close since March 6. ICICI Bank Ltd., the second-biggest lender, lost 1.1 percent to 998.15 rupees, its lowest close since Sept. 13, 2012. Housing Development Finance lost 2.7 percent to 770.8 rupees, extending this week’s loss to 6.7 percent.

Valuations Narrow

Mahindra & Mahindra Ltd., the country’s largest producer of sport-utility vehicles, fell 1.2 percent to 837.9 rupees. Bharti Airtel Ltd., the nation’s biggest mobile-phone operator, slid 1.2 percent to 270.25 rupees, extending this week’s fall to 7.4 percent, the most on the Sensex.

The Sensex has slid 5 percent this year. The gauge trades at 12.45 times projected 12-month profits, the lowest level since July, and down from this year’s peak of 13.8 times in January. The MSCI Emerging Markets Index trades at 10.2 times, the lowest since November.

India’s economy expanded 4.5 percent from a year earlier in the final three months of 2012, the weakest quarterly pace in almost four years. The statistics bureau predicts an annual expansion of 5 percent in the year ended March, the lowest in a decade. The current-account deficit widened to a record $32.6 billion in the December quarter, data showed March 29.

Relative Value

Overseas investors have still bought a net $10.3 billion of Indian stocks this year, data compiled by Bloomberg show. Indian equity mutual funds recorded nine straight months of outflows through February, losing about 135 billion rupees ($2.5 billion), according to data from a trade body.

“While Indian investors have completely given up on the market, foreign investors still see some relative value but again they’re looking for safety and high-quality companies,” Geosphere’s Sanger said.

Volumes on the Sensex were 35 percent less than the 30-day average. The CNX Nifty Index lost 0.4 percent to 5,553.25. Its April futures settled at 5,572.05. India VIX, which gauges the cost of protection against losses in the Nifty, added 2 percent to 16.16.

Maruti Suzuki India Ltd., the carmaker majority owned by Japan’s Suzuki Motor Corp., increased 7.3 percent to 1,406.3 rupees, its steepest surge since Jan. 17, 2012. The yen’s 18 percent weakening versus the rupee since the second quarter can boost Maruti’s profit margin by 490 basis points, CLSA Asia-Pacific Markets wrote in an investor note yesterday.

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