Indian Stocks Drop as Energy, Automobile Companies Decline

Most Indian stocks dropped as some investors bet the benchmark index’s gain to a three-year high yesterday was excessive. Automobile makers and energy companies led the retreat.

Hero MotoCorp Ltd., the nation’s largest motorcycle maker, slid for the first time in four days. Reliance Industries Ltd., owner of the world’s biggest refining complex, fell the most in two weeks. Housing Development Finance Corp. declined to the lowest level this month. Software exporter Wipro Ltd. climbed to a 13-year high ahead of its quarterly results.

The S&P BSE Sensex lost 0.1 percent to 20,864.97 at the close in Mumbai. The gauge yesterday rose to within 0.5 percent of its record closing high of 21,004.96 set on Nov. 5, 2010, as more companies posted earnings that beat analysts’ forecasts and foreign investors boosted their holdings of local shares. The Sensex’s 14-day relative strength index was 67.6 yesterday, near the 70-level seen by some investors as a signal to sell.

“Markets are consolidating after approaching an all-time high,” Jitendra Panda, head of broking at Capital First Ltd., said by phone from Mumbai. “The rally has been fueled by some good earnings and investors are booking profit.”

Profits all eight of the 30 companies in the Sensex that have announced results for the September quarter have beaten or matched estimates, data compiled by Bloomberg show. About 47 percent of the companies trailed forecasts in the June quarter, versus 27 percent for the three months ended March and 43 percent in the period through December, the data show.

Overseas investors bought a net $163 million of stocks on Oct. 21, a 12th straight day of purchase, data from the market regulator show. That brought this year’s inflows to a net $15.1 billion of Indian stocks, the second-highest after Japan among 10 Asian markets tracked by Bloomberg.

Sensex Valuation

The purchases have helped the Sensex rise 7.4 percent this year, compared with the 1.5 percent drop in the MSCI Emerging Markets Index. The Indian gauge trades at 14.1 times estimated 12-month earnings, versus the MSCI EM Index’s multiple of 10.8.

Hero MotoCorp retreated 1.6 percent to 2,066.9 rupees, the second-worst performer on the Sensex today. The decline ended a three-day, 2.4 percent rally that sent the stock to its highest price in three months yesterday. Mahindra & Mahindra Ltd., the nation’s largest tractor maker, retreated 1.4 percent.

Reliance dropped 1 percent to 904.2 rupees, the most since Oct. 1. Housing Development Finance Corp. lost 1.3 percent to 810.7 rupees, the steepest retreat since Sept. 30.

Wipro added 1.7 percent to 514.8 rupees, the highest close since March 2000. India’s third-biggest software exporter said after market close that profit grew 20 percent to 19.3 billion rupees ($313 million) in the three months ended Sept. 30. That beat the 18.4-billion rupee median estimate of 44 analysts in a Bloomberg survey.

The 50-stock CNX Nifty Index fell less than 0.1 percent to 6,202.80. The India VIX, which gauges the cost of protection against losses in the Nifty, fell 1.1 percent.

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