India's Sensex Halts Four-Week Rally Before RBI Policy Meeting

  • Central bank seen cutting borrowing costs by 25 bps on Tuesday
  • FIIs buy $3.4b of India shares in March, most since March 2014

Indian stocks began the first day of the new fiscal year with a loss as the benchmark gauge ended a four-week rally before the central bank’s policy meeting next week and amid losses in global equities.

Bharti Airtel Ltd., the largest mobile-phone operator, tumbled the most in seven months. Mahindra & Mahindra Ltd., a tractor maker, fell for a sixth day, capping its longest losing streak in two months. Oil & Natural Gas Corp. and Gail India Ltd., the top state-run energy companies, were among the worst performers on S&P BSE Sensex. Tata Consultancy Services Ltd. decreased the most in seven weeks.

About three stocks tumbled for every two that rose on the Sensex, which lost 0.3 percent to 25,269.64 at the close in Mumbai. The losses follow a 10 percent jump in the index last month as a government pledge to further cut the nation’s fiscal deficit and speculation of an interest-rate cut lead to the biggest inflow from overseas investors in two years. The Reserve Bank of India will review borrowing costs on April 5.

“The market is taking a breather after the superb rally," said A. K. Prabhakar, head of research at IDBI Capital Capital Market Services Ltd., said by phone from Mumbai. “Investors are waiting for the RBI policy and the quarterly earnings season for guidance." He is advising clients to buy shares of cement and fertilizer companies.

Earnings Season

The central bank will cut borrowing costs by 25 basis points on Tuesday, according to the median estimate of 44 analysts in a Bloomberg survey.

Investors are focusing on the March quarter earnings season to see if economic expansion filters through to company earnings. Profit have fallen in four of the last five quarters in the worst run since the financial crisis. That’s despite the government forecasting the country to expand faster than any other major economy in the fiscal year through March.

Bharti Airtel plunged 4.4 percent, extending this week’s loss to 6.4 percent, the most on the Sensex. Mahindra & Mahindra decreased 1.3 percent. Oil & Natural Gas tumbled 2.5 percent, while Gail India plunged 2.4 percent. Tata Consultancy slid 2.6 percent, after rallying 16 percent in March.

Bharat Heavy Electricals Ltd., India’s biggest power-equipment maker, climbed the most on the Sensex after Deutsche Bank AG upgraded the stock to buy from sell and raised the price target by 40 percent to 140 rupees. The stock added 2.3 percent to last month’s 25 surge, which ended seven straight months of declines.

International investors purchased $3.4 billion of Indian shares last month, the most since March 2014. The inflows helped the Sensex cut the year’s losses to 3.3 percent. The MSCI Emerging Markets Index is up 4.1 percent since Jan. 1.

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