Indian Stocks Decline Amid Derivatives Expiry as Bharti Tumbles

  • Earnings at 6 of 12 Sensex companies beat or match estimates
  • Sensex set for worst January since 2011 amid global selloff

Indian stocks dropped for the first time in four days in volatile trading amid expiry of derivatives contracts and as investors awaited quarterly earnings reports from some of the nation’s largest companies including ICICI Bank Ltd.and Maruti Suzuki India Ltd.

ICICI Bank, the largest private lender, halted four days of gains. Maruti Suzuki, the maker of half the cars sold in India, was little changed after falling as much as 2 percent. Bharti Airtel Ltd. slid to its lowest level since March 2014 before its results. Hindustan Unilever Ltd. and Mahindra & Mahindra Ltd. were the top performers on the S&P BSE Sensex.

The Sensex lost 0.1 percent at the close in Mumbai, after changing direction at least 20 times. Investor attention turned to corporate results as the Federal Reserve indicated Wednesday that it will raise interest rates at a gradual pace while watching to see the effect of the turmoil in global markets on the U.S. economy. The Sensex is on course for the worst January since 2011, as foreigners sold $1.7 billion of local assets amid worries about global growth and a rout in oil prices.

“The earnings season hasn’t been disappointing so far but the remainder of the results have to show growth for us to decisively say that we have seen the bottom," Gaurang Shah, vice president at Geojit BNP Paribas Financial Services Ltd., said in an interview with Bloomberg TV India on Thursday. “We’re stuck in a range until then.”

Six of the 12 Sensex firms that have posted December-quarter results so far have beaten or matched estimates, versus 57 percent in the three months ended September and 60 percent in June, data compiled by Bloomberg show.

Asset Quality

ICICI Bank reported after market hours the slowest quarterly profit growth in six years as bad loans surged. Net income climbed 4.5 percent to 30.2 billion rupees ($443 million) in December quarter, missing the 30.6 billion-rupee mean of 30 analyst estimates compiled by Bloomberg. The shares declined 1.7 percent, taking this year’s loss to 11 percent. The stock slumped 26 percent in 2015.

“The results show the tremendous pressure that ICICI is going through on asset quality,” Chokkalingam G., managing director at Equinomics Research Pvt. in Mumbai, said in an interview to Bloomberg TV India. “A lot of this has been priced into the stock to a large extent. I don’t expect any panic tomorrow.”

Earnings Scorecard

Bharti Airtel reported after market hours its first profit drop in nine quarters. Earnings retreated 22 percent to 11.2 billion rupees, missing the 12.3 billion-rupee mean estimate compiled by Bloomberg. The shares, which have slid 14 percent this month, were among the biggest decliners on the Sensex.

Maruti Suzuki is expected to post a 66 percent jump in net income to 13.3 billion rupees. The stock, the best performer on the Sensex in 2015, lost 0.2 percent.

Housing Development Finance Corp., India’s biggest mortgage lender, dropped 1.9 percent after its third-quarter profit missed estimates. The company reported after trading ended Wednesday a net income of 15.2 billion rupees, missing the 15.6 billion rupees estimated by analysts.

Nifty Rollovers

The 50-stock Nifty index lost 0.2 percent to 7,424.65 at the close. Traders rolled over 67 percent of futures contracts at 4:11 p.m. to the February series that starts Friday. That compares with a six-month mean of 72 percent, data compiled by Bloomberg show.

Hindustan Unilever surged the most since Sept. 30, while ITC Ltd., the biggest cigarette company, added 1.8 percent. Mahindra rallied to its highest level since Jan. 13.

The Sensex trades at 14.7 times its projected 12-month profits, versus a multiple of 10.6 for the MSCI Emerging Markets Index. Overseas funds bought a net $18 million of local stocks on Jan. 25, halting seven days of outflows.

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