India’s Sensex Completes Weekly Drop as TCS Retreats on EarningsRajhkumar K Shaaw
Indian stocks capped the first weekly drop in four weeks Friday as the nation’s largest software developer declined after reporting quarterly results.
Tata Consultancy Services Ltd. slid for a fourth day after its sales for the quarter ended June 30 grew at a slower rate than some analysts forecast. Bharti Airtel Ltd., the biggest phone company, fell the most in more than three months. Vedanta Ltd., a copper producer, rallied from its lowest level since August 2013.
The Sensex gained 0.3 percent to 27,661.40 at the close in Mumbai Friday, after changing direction at least 15 times. The gauge dropped 1.5 percent the past week, the most since the period ended June 5. TCS’s first-quarter sales growth of 16 percent was slower than some analysts’ expectations.
“The markets will trade in a broad range and will be volatile,” Jagannadham Thunuguntla, head of fundamental research at Karvy Stock Broking Ltd., said in a phone interview. “We don’t have control over global macros, you have to take it as it comes. The direction of the Indian market will be set by how the Indian corporate earnings and the economic recovery pan out.”
Asian stocks rose Friday as Chinese equities rebounded for a second day and Greece submitted a bailout proposal similar to that proposed by its creditors.
The MSCI Asia Pacific Index climbed 0.5 percent, paring this week’s drop to 3.5 percent. The Stoxx Europe 600 Index rose 1.7 percent. It extended gains after a European Union official said institutions will form a view on Greece’s proposal later Friday, and that the region’s leaders need not hold a summit Sunday if an agreement is reached. Benchmark gauges of Spain, Italy and France, which entered corrections on Monday, surged more than 2.6 percent.
The Shanghai Composite Index advanced 4.5 percent, capping the benchmark index’s biggest two-day gain since 2008, as unprecedented government intervention helped curb an equity rout that erased $3.9 trillion in less than a month.
TCS shares fell 1.9 percent to their lowest close since May 6. Morgan Stanley lowered the company’s U.S. dollar-denominated revenue forecasts through the year ending March 2018 by as much as 3.3 percent after Thursday’s earnings report, and said it saw limited room for an increase in the stock.
TCS was the first Sensex company to report earnings for the quarter ended June. Infosys Ltd., TCS’s nearest Indian competitor, is scheduled to report results on July 21. Infosys slid 5.3 percent this week.
Concern over inflation has resurfaced as potentially deficient monsoon rains threaten to hurt crops and stoke food costs, which make up about half of India’s consumer price inflation basket. The national weather bureau predicts the June-September showers will be 88 percent of a 50-year average this year. Rainfall has been 4 percent below normal since June 1.
“The market seems to have stabilized, but it will continue to be volatile simply because the earnings season has just started, Abhishek Anand, a fund manager at Centrum Broking Ltd., said in an interview to Bloomberg TV India. ‘‘The market will take cues from how the monsoon pans out. The global developments as and when the newsflow comes out will have an impact on the markets.’’
Forty percent of the Sensex’s 30 companies beat or matched profit estimates in the March quarter, compared with 47 percent in the October-December period and 67 percent in the three months to September, according to data compiled by Bloomberg.
Bharti dropped 3.4 percent, its steepest loss since March 27, and was the biggest decliner among Sensex constituents.
Vedanta Ltd. rebounded 5.3 percent, after falling for a sixth day on Thursday. Tata Steel Ltd., the nation’s biggest producer of the alloy, added 0.1 percent, ending six days of losses. Sun Pharmaceutical Industries Ltd., India’s most valuable drugmaker, surged 3.1 percent. HDFC Bank Ltd. gained 1.6 percent.
International investors sold a net $53.2 million of Indian stocks on July 8, paring this year’s inflow to $6.8 billion.
The Sensex trades at 14.1 times projected 12-month earnings. The MSCI Emerging Markets Index is valued at a multiple of 11.4.
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