India’s Sensex Falls to 3-Week Low as Reliance Drops With Rupee

Indian stocks dropped for a fourth day and the rupee had its biggest decline this year amid concern that company earnings may trail analyst estimates.

Reliance Industries Ltd., owner of the world’s largest oil-refining complex, tumbled the most since Jan. 6. Tata Consultancy Services Ltd. and Infosys Ltd. slid for a fourth day, dragging down an index of software shares by the most in three weeks. Mahindra & Mahindra Ltd., a tractor maker, dropped for a second day. The rupee fell 0.9 percent, the biggest drop since Dec. 16.

The S&P BSE Sensex declined 2 percent to 27,886.21, the lowest close since March 27. The gauge slid 1.5 percent last week after TCS, India’s most valuable company, reported a drop in quarterly earnings. Sensex company profits will likely fall for a second straight quarter, according to estimates compiled by Bloomberg. UBS AG today cut its December target for the CNX Nifty index by 4 percent to 9,200, citing a slowdown in profit growth. The 50-stock measure closed at 8,448.09.

“The impact of delayed recovery is hitting the market,” Ajay Srivastava, managing director of Dimensions Consulting Pvt., said in an interview with Bloomberg TV India today. “The global economy is wobbly, oil has risen sharply and back home, rural demand and retail sales are down. The exuberance is over and reality has checked in.”

The Sensex lost 4.8 percent in March, the worst month in two years, as investors sought more evidence that Prime Minister Narendra Modi’s efforts to boost economic growth will lead to a revival in corporate profitability.

Earnings Impact

Macquarie Capital Securities India Pvt., the most accurate index forecaster for the past two years in Bloomberg surveys, trimmed its earnings forecast for the 30 Sensex companies by 2.2 percent for the year through March 2016.

TCS dropped 1.9 percent, completing its biggest four-day loss since the period ended Oct. 21. Infosys lost 2.2 percent. Mahindra & Mahindra lost 3 percent. Axis Bank Ltd. retreated 2.9 percent to its lowest level since Jan. 16.

Reliance plunged 4.5 percent, the most on the Sensex, even as its quarterly profit beat analyst estimates. Fourth-quarter net income rose 10.8 percent to 62.4 billion rupees ($1 billion), the company said after markets closed Friday. That exceeded the 59.6-billion rupee median of 16 analyst estimates compiled by Bloomberg.

The stock rallied 12 percent since April 1 through Friday, compared with a 1.7 percent gain in the Sensex in the period.

The rupee fell to 62.9175 per dollar as a slump in exports widened India’s trade deficit to a four-month high. The trade gap reached $11.8 billion in March as shipments dropped 21.1 percent from a year earlier, official figures showed after trading ended on Friday.

Global investors sold a net $107 million of local shares on April 17, paring this year’s inflows to $6.2 billion, still the highest in Asia after Japan. Foreigners bought $16 billion of stocks last year.

The Sensex has gained 1.4 percent this year and trades at 15.7 times projected 12-month earnings, compared with the MSCI Emerging Markets Index’s multiple of 12.4.

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