India's Sensex Drops in Volatile Trade as Technology Stocks Fall

  • Trading to stay subdued in holiday-shortened week, expiry
  • Reliance Comm. climbs to one-year high on Aircel merger talks

Indian stocks declined for a second time in seven days in volatile trade, led by technology and consumer companies.

Tata Consultancy Services Ltd. and Infosys Ltd., the biggest software exporters, slid at least 1.5 percent. ITC Ltd., the largest cigarette company, is set for its first annual drop in seven years. Mahindra & Mahindra Ltd., a tractor maker, fell the most in a week. Adani Ports & Special Economic Zone Ltd., which became part of the S&P BSE Sensex on Monday, declined for the first time in four days.

The Sensex declined 0.6 percent to 25,590.65 at the close, after changing direction at least eight times. Trading may remain subdued as the gridlock in parliament stalls the passage of crucial bills including a goods and services tax in a holiday-shortened week, according to Taurus Asset Management Co.

“There are no triggers, with the parliament session ending tomorrow without any movement on the major bills,” said R. K. Gupta, managing director of Taurus Asset in New Delhi. “It’s also a short week before Christmas holiday on Friday, and traders are not willing to take undue risks.”

India’s economy will expand 7 percent to 7.5 percent this fiscal year, Finance Minister Arun Jaitley told lawmakers this month. While still among the fastest in the world, the pace is lower than the previous forecast of 8 percent as a gridlock in parliament stalls crucial bills and China’s slowdown jeopardizes global growth.

Tata Consultancy Services declined 1.7 percent, the most since Nov. 13. Infosys lost 1.8 percent, paring this year’s advance to 10 percent. ITC retreated 1.9 percent, extending this year’s loss to 13 percent. Mahindra & Mahindra slipped 1.7 percent. Adani Ports lost 1.2 percent, the most since Dec. 11.

Reliance Communications Ltd., the telecom operator owned by billionaire Anil Ambani, gained 2.2 percent to its highest level in a year after saying it is in talks to merge with smaller wireless carrier Aircel Ltd.

Reliance is considering the "potential combination" of its wireless operations with those of Aircel, it said in a filing. Though the statement didn’t provide financial details, the company has 90 days to have exclusive talks with Aircel owners -- Malaysia’s Maxis Communications Bhd and Sindya Securities & Investments Pvt.

Reliance Communications has risen 26 percent in the current quarter and has been the top performer in the 13-member S&P BSE Telecom Index in the past month.

International investors bought a net $43 million of Indian stocks on Dec. 21, taking this year’s purchase to $2.8 billion. The Sensex trades at 15.4 times projected 12-month earnings, compared with the MSCI Emerging Markets Index’s multiple of 11.1.

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