Indian Stocks Drop to Seven-Month Low, Led by Software Exporters

India’s benchmark stock index fell to a seven-month low amid concern company earnings will trail analysts’ estimates. Software exporters led the decline.

The S&P BSE Sensex dropped 1.2 percent to 18,226.48, the lowest close since Sept. 13. Wipro Ltd. plunged the most in more than four years after the India’s third-biggest software maker began trading without its three non-technology divisions. Oil & Natural Gas Corp. lost 2.9 percent.

Foreigners sold a net $19 million of local shares on April 8, a fifth day of outflows, the longest stretch since May, data compiled by Bloomberg show. Overseas investors are paring this year’s purchases amid the weakest economic growth in a decade. They bought a net $24.5 billion of shares last year, the most among 10 Asian markets tracked by Bloomberg, as Prime Minister Manmohan Singh initiated steps to open the economy to foreign investment, ending more than a two-year logjam in economic decision-making.

“Overseas investors, who came in with the expectation that the government will push ahead with economic reforms, are disappointed,” said Sandip Sabharwal, chief executive officer of portfolio management at Prabhudas Lilladher Pvt. in Mumbai, said by phone today. “Promises made by the prime minister and the finance minister are not being executed on the ground.”

Wipro Spinoff

Infosys Ltd., India’s second-largest software exporter, tumbled 2.3 percent to 2,766.35 rupees. Wipro sank 12 percent to 393.7 rupees, the most since October 2008. Billionaire Chairman Azim Premji’s company began trading for the first time as a standalone software company after it spun off its consumer care, lighting and engineering businesses. Computer software and products brought in about 86 percent of revenue in the year ended March 2012, data compiled by Bloomberg show. The S&P BSE IT index decreased 2.1 percent to the lowest since Feb. 18.

Oil & Natural Gas tumbled 2.9 percent to 303.8 rupees. State Bank of India, the nation’s biggest lender, declined 2.2 percent to 1,988.25 rupees. Bharat Heavy Electricals Ltd., the nation’s largest power-equipment maker, decreased 2.1 percent to 178.75 rupees. ITC Ltd., India’s biggest cigarette company, slid 1.9 percent to 287.2 rupees.

India’s economy grew 4.5 percent from a year earlier in the last quarter of 2012, the weakest pace since 2009, and the government forecasts an annual growth rate of about 5 percent, the least in a decade. The nation’s current-account deficit is at a record and its inflation rate is the fastest among major emerging nations.

‘Falling Knife’

The slowdown has contributed to declining company profits. Net incomes at about 43 percent of the 30 Sensex firms trailed analyst estimates in the three months ended December, compared with 40 percent in the previous two quarters, data compiled by Bloomberg show. Infosys is due to report earnings on April 12, kicking off the reporting season for the March quarter.

“Looking at the macro data it is quite clear earnings this quarter could be worse than what was earlier envisaged,” Ambareesh Baliga, managing partner of Global Wealth Management at Edelweiss Financial Services, told Bloomberg TV India today. “It doesn’t make sense to catch a falling knife. It is better to stay out of the markets for a bit.”

The 50-stock CNX Nifty Index lost 0.9 percent to 5,495.10. Its April futures settled at 5,500.85. India VIX, which measures the cost of protection against losses in the Nifty, rose 0.3 percent to 16.82.

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