India's Sensex Drops as TCS, Hindustan Unilever Fall on Earnings
Tata Consultancy falls most in a year as sales trail estimates
Hindalco, Reliance Industries, Lupin advance in volatile trade
India’s benchmark stock index dropped for a third day after sales at Tata Consultancy Services Ltd. and Hindustan Unilever Ltd. missed analysts’ estimates.
Tata Consultancy, Asia’s biggest software-services company, tumbled the most in a year after its quarterly revenue fell short of estimates. Hindustan Unilever, the biggest household products maker, declined for a sixth day after its net income and sales missed estimates. Tata Motors Ltd. and Coal India Ltd. fell more than 1.5 percent. Hindalco Industries Ltd., the biggest aluminum producer, resumed its rally, while Reliance Industries Ltd., owner of the world’s largest refining complex, added 1.1 percent.
The S&P BSE Sensex dropped 0.3 percent to 26,779.66 at the close in Mumbai, after changing directions at least 20 times. The gauge fell for a third day, the longest losing run in more than a month, after rallying for two weeks through Friday. So far, two of three Sensex companies that have reported September-quarter results have matched or beaten estimates.
“The markets are in a consolidation mode and a clear direction will depend on how the rest of the earnings season pans out and the outcome of the Bihar state elections,” D. K. Aggarwal, chairman of SMC Investments Pvt., said by phone from New Delhi. Aggarwal said he favors shares of engineering, power, automobiles and consumer companies.
The ongoing elections in Bihar are important for Prime Minister Narendra Modi’s efforts to control the upper house of parliament, where opposition lawmakers have blocked key economic proposals including a nationwide sales tax. A win would give him momentum in about a dozen more state elections through 2017 that will determine control of the body. Poll results are due on Nov. 8.
Tata Consultancy’s revenue in the September quarter jumped 14 percent to 271.7 billion rupees ($4.2 billion), still trailing the 272.3 billion-rupee estimate in a Bloomberg survey. Net income increased to 60.6 billion rupees, almost matching the estimate of 60.3 billion rupees. The shares plunged 4.4 percent, the most since Oct. 17, 2014. Nearest rival Infosys Ltd. fell for the third day after the company reduced its annual sales growth forecast in dollar terms on Monday.
JLR in China
Hindustan Unilever today reported second-quarter profit of 9.62 billion rupees, missing the 10.4 billion rupees estimated by analysts. The company reported sales of 78.2 billion rupees, compared with the estimated 80.3 billion rupees. The shares tumbled 1.9 percent, the most since Sept. 8.
Tata Motors, India’s biggest truckmaker and owner of Jaguar Land Rover, plunged 2.4 percent. Jaguar Land Rover deliveries in China dropped 32 percent in the second quarter, according to an e-mailed statement. The luxury unit also expects a one-time charge on impact from Tianjin blast, the e-mail said.
Coal India, the world’s biggest producer of the fuel, lost 1.7 percent. ICICI Bank Ltd. retreated 1.6 percent.
Hindalco climbed 2.8 percent, extending this month’s rally to 25 percent. Tata Steel Ltd., the biggest producer of the alloy, added 1.4 percent to last week’s 18 percent gain. Reliance Industries climbed 1.1 percent in a third day of gain. Drugmaker Lupin Ltd. rose 1.9 percent.
India’s wholesale prices fell for the 11th straight month. The index dropped 4.54 percent in September from a year earlier, the Commerce Ministry said Wednesday, more than the 4.42 percent decline predicted by the median estimate in a Bloomberg survey of 36 economists. The gauge had fallen 4.95 percent in August.
Reserve Bank of India Governor Raghuram Rajan cut interest rates by a steeper-than-expected 50 basis points last month and said policy must stay accommodative to the extent possible. Consumer prices gained 4.4 percent in September, faster than August’s 3.7 percent, yet below the central bank’s 6 percent inflation target for the 13th month.
International investors bought a net $49 million of Indian stocks on Oct. 12, taking this year’s inflow to $3.9 billion, the most among eight Asian markets tracked by Bloomberg.
The Sensex has fallen 2.6 percent this year and trades at 15.5 times projected 12-month earnings. The MSCI Emerging Markets Index is valued at a multiple of 11.2.