India’s Sensex Extends Two-Day Tumble as Metalmakers Decline

Indian stocks fell in a volatile trade, with the benchmark index falling for a third day, as metal producers and consumer-product companies declined.

Tata Steel Ltd. tumbled to its lowest level since October 2013, while Vedanta Ltd., the top copper and aluminum producer, slid for a third day. ITC Ltd., the largest cigarette maker, tumbled to its lowest level since September 2013. Nestle India Ltd. capped its worst two-day fall since June 2006 after some states banned sales of its Maggi noodles pending lab tests.

The S&P BSE Sensex slid 0.1 percent to 26,813.42 at the close, paring an intraday loss of 1.1 percent in the last hour of the session. The gauge has dropped 3.7 percent so far this month on concern poor rains will discourage the central bank from adding to three interest-rate cuts this year, which may delay a recovery in corporate earnings. Profits at the Sensex companies fell for a second straight quarter in March, data compiled by Bloomberg show.

“It’s a reality check for the market,” Amit Khurana, director of research at Dolat Capital Market Pvt. in Mumbai, said in an interview with Bloomberg TV India. “How the monsoon shapes up is extremely important. The markets will remain in a consolidation mode.”

Reserve Bank of India Governor Raghuram Rajan cut the key rate by 25 basis points on Tuesday, saying he will assess the monsoon before acting again. The rate decision came two hours before the government said this year’s rainfall is forecast to be even less than its prediction in April.

Tata Steel plunged 2.6 percent, the worst performer on the Sensex, and Vedanta fell 2.2 percent. Hindalco Industries Ltd. dropped for a 10th day, the longest losing streak since January 2014. ITC slid 0.9 percent. Hindustan Unilever Ltd., India’s biggest home-products maker, fell to a five-month low.

Maggi Tests

Nestle India slumped 3 percent, extending Wednesday’s 9.1 percent tumble. The company said it was cooperating with local authorities though its own tests showed lead levels well within regulations.

Tata Motors Ltd., owner of Jaguar Land Rover, fell for a fifth day, while Sun Pharmaceutical Industries Ltd., India’s most-valuable drugmaker, extended the week’s loss to 14 percent.

The Sensex, among the world’s best performers in 2014, is the worst performer in Asia this year as enthusiasm waned over Prime Minister Narendra Modi’s ability to execute key economic reforms, and as the rally in Chinese stocks became too big to ignore. The gauge trades at 14.9 times estimated 12-month profits, compared with the five-year average of 14.4 times. The MSCI Emerging Markets Index is valued at a multiple of 12.1.

Global investors sold a net $105 million of Indian stocks on June 2, paring this year’s inflows to $7.1 billion.

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