Indian Stocks End Two-Week Advance as ICICI Drags Lenders Lower

  • ICICI Bank profit slumps 75% as provisions for bad loans rise
  • FIIs buy $588m of shares in April after $4.1b inflow in March

India’s benchmark stock index capped its first weekly decline in three weeks as ICICI Bank Ltd. reported its biggest drop in quarterly profit in at least 15 years as provisions for bad loans surged.

ICICI and State Bank of India, the nation’s biggest lenders, were the worst performers on the S&P BSE Sensex this week. Bharti Airtel Ltd., the largest mobile-phone operator, fell the most in three weeks. Vedanta Ltd., a producer of aluminum and copper, rose for the first time in three days after its earnings report.

The Sensex closed little changed after swinging between gains and losses at least 20 times. The gauge lost 0.9 percent this week and Friday’s decline pared the monthly gain to 1 percent. Bad-loan concerns resurfaced after ICICI Bank’s results. Eleven banks in India reported losses in the three months ended December amid surging bad loans after the nation’s central bank began an audit, known as the asset-quality review, on Oct. 1.

“ICICI Bank is a heavyweight and its earnings have spooked the market,” Paras Bothra, a Mumbai-based vice president of equity research at Ashika Stock Broking Ltd., said by phone. “And the state-owned banks are yet to announce their earnings.”

Earnings Reports

ICICI Bank said profit plunged 75 percent to 7 billion rupees ($105 million), missing the 30.7 billion-rupee average of 25 estimates compiled by Bloomberg. The lender set aside 36 billion rupees as buffer for possible defaults. The stock slid 1.3 percent, extending the weekly loss to 6 percent, the most on the Sensex. State Bank lost 1.6 percent.

So far, five out of nine Sensex companies that have reported March-quarter results beat or matched analyst estimates.

The Sensex has risen 12 percent from a February low as the risk-on sentiment returned to Asia. Foreigners bought $588 million of local shares this month, adding to last month’s inflow of $4.1 billion, which was the most in three years. There’s concern that flows into equities may slow after the Bank of Japan this week held off from adding to its monetary stimulus and the U.S. Federal Reserve kept its benchmark rate unchanged.

“We’re in a consolidation phase after the big rally,” Kaushik Dani, a fund manager with Karvy Stock Broking Ltd. in Mumbai, said by phone. “Investors are pausing, digesting the rally and will move depending on how the earnings pan out.”

Vedanta jumped 4 percent, ending a two-day, 6.3 percent drop. The company reported fourth quarter net income before exceptional charges at 9.55 billion rupees, beating the 5.63 billion estimated by analysts. It sales in the March quarter was 158.3 billion rupees compared with an estimate of 154.8 billion rupees.

Mahindra & Mahindra Ltd., a tractor maker, slid 1 percent in a second day of declines. Bharti Airtel Ltd. fell 2.4 percent to pare this month’s gains to 3.7 percent.

Foreign investors bought $36 million of local stocks on April 28, taking this year’s inflows to $1.8 billion. The Sensex has retreated 2 percent this year and trades at 15.7 times 12-month projected earnings versus 11.8 for the MSCI Emerging Markets Index.

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