India’s Sensex Index Declines for a Third Day as Lenders Drop

India’s benchmark index fell for a third day, erasing the biggest gain in more than a week as lenders declined, countering an advance in technology stocks.

State Bank of India dropped 3.2 percent, leading a gauge of banking shares down the most in three weeks. Power equipment manufacturer Bharat Heavy Electricals Ltd. fell to a six-week low after its second-quarter profit missed estimates and Citigroup Inc. cut its price target on the stock. Infosys Ltd. climbed to the highest level since January 2011 as technology companies increased.

The S&P BSE Sensex fell 0.4 percent to 20,822.77 at the close in Mumbai. The index earlier advanced 1.2 percent. The CNX Nifty Index dropped 0.5 percent to 6,187.25. The rupee fell as much as 0.5 percent to 62.73 per dollar, the lowest in five weeks. A declining currency fans inflation in India by raising the cost of imported oil and limiting the central bank’s ability to cut borrowing costs to spur an economy growing at the slowest pace in a decade.

“The weak rupee is hurting investor sentiment, especially for lenders,” Suniil Pachisia, vice president of Pratibhuti Viniyog Ltd., said by phone today. “Investors are booking profits amid fears there will be more liquidity tightening measures by the Reserve Bank of India.”

The rupee fell before U.S. economic data due today that may provide an indication of when the Federal Reserve will taper stimulus, and amid concern overseas inflows into Indian stocks may slow. The currency has dropped 1.6 percent this month, following gains of 1.8 percent in October and 4.9 percent in September. It tumbled to a record low on Aug. 28.

Foreign Flows

International investors bought a net $46.1 million of Indian stocks on Nov. 6, a 23rd consecutive day of inflows, data from the market regulator showed today. They have purchased $112 million of shares so far this month, after inflows of $2.9 billion in October and $2 billion in September.

State Bank slumped to the lowest level since Oct. 30. ICICI Bank Ltd. declined 2.7 percent to 1,051.45 rupees. The S&P BSE Bankex dropped 2.1 percent, the most in three weeks.

The weakening rupee boosted shares of software exporters, which generate most of their sales outside India. Infosys increased 1.6 percent, while Tata Consultancy Services Ltd. climbed 1.5 percent to the highest close since Oct. 15. The S&P BSE IT Index rose 1.3 percent, also to the highest since Oct. 15.

Infosys gets 98 percent of its revenue from overseas, and Tata Consultancy about 92 percent, according to data compiled by Bloomberg.

Earnings Reports

Tata Steel Ltd. added 3.8 percent to the highest level in seven months. The S&P BSE Metal Index rose for the first time in three days.

Bharat Heavy slumped 4.1 percent to the lowest level since Sept. 24 after the company reported quarterly profit yesterday that missed estimates and Citigroup Inc. cut its forecast.

Profits at 16 of the 20 companies in the Sensex that have posted results for the three months ended Sept. 30 so far exceeded analyst estimates, compared with 47 percent that missed forecasts in the previous quarter.

The Sensex has risen 7.2 percent this year and trades at 13.8 times projected 12-month profits, compared with the MSCI Emerging Markets Index’s 10.6 times.

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