Indian Stocks Retreat for Third Day to Pare Weekly Advance

  • Technology, telecom companies pace drop among Indian shares
  • GAIL, Tata Steel, Tata Motors climb most on Sensex this week

Indian stocks trimmed the biggest weekly gain in almost a month before a U.S. jobs report as declines in software exporters and telecom companies offset increases in metal shares.

About three shares fell for every two that climbed on the S&P BSE Sensex, which changed direction at least seven times. The gauge is up 0.5 percent for the week, rebounding from a 2.8 percent drop in the previous five days, which was the steepest since February following India’s attacks on militants in Pakistan. Foreign investors kept faith in the nation’s equities, buying $245 million this week, adding to the $1.4 billion they purchased in September.

IndexChangeWeekly Gain
BSE Sensex-0.2%0.7%
NSE Nifty 50 -0.1%1%
S&P BSE MidCapLittle Changed2.9%
S&P BSE Energy-0.4%4%

“The markets will trade in a range in the near term as there as too many uncertainties such as the Fed rates, U.S. presidential elections and the corporate earnings season,” R.K. Gupta, managing director at Taurus Asset Management Co., which has $480 million in assets, said by phone from New Delhi. “At the same time, the liquidity is very strong. So every fall is being bought into aggressively."

Stocks were buoyed earlier this week by the central bank’s move to ease borrowing costs. The six-member Monetary Policy Committee led by newly-appointed Reserve Bank of India Governor Urjit Patel took the country’s first collective interest-rate decision Tuesday, moving to cut the main repurchase rate to a more than five-year low of 6.25 percent. That was after consumer-price inflation slowed to a five-month low in August.

The Sensex fell for a third day amid concern the Federal Reserve may raise rates this year. Odds that it will do so by December rose to 64 percent from 53 percent a week ago, ahead of the official labor report Friday. Global investors are waiting for U.S. economic reports to gauge the strength of the world’s biggest economy and watching for comments by Federal Reserve officials to assess the path of interest rates.

Overseas investors bought $54 million of local stocks on Oct. 5, taking this year’s inflows to $7.8 billion, data compiled by Bloomberg show. That’s more than double the $3.3 billion they purchased in all of 2015.

The Sensex is valued at 15.7 times projected 12-month earnings, while the MSCI Emerging Markets Index trades at a multiple of 12.5, data compiled by Bloomberg show.

“There is little bit of caution as valuations have run up,” said Ajay Srivastava, New Delhi-based managing director at Dimensions Consulting Pvt. “Traders are more circumspect than long-term investors, which is why you don’t see panic selling in the market. Investors are willing to wait for the long haul.”

  • Steelmakers rallied after the European Union imposed tariffs as high as 73.7 percent on two types of steel from China in a bid to curb competition for EU producers including ArcelorMittal and ThyssenKrupp AG. Tata Steel Ltd., the biggest producer alloy which also has a unit in Europe, jumped 4.3 percent to its highest level since January 2015. The stock has rallied 56 percent this year, the best performer on the Sensex. Steel Authority of India Ltd. surged 4.2 percent.

  • Bharat Forge Ltd. rose 2.8 percent to a one-year high after the stock was raised to buy from sell at CLSA Asia-Pacific Markets.

  • Tata Motors Ltd. was among the top gainers on the Sensex after its Jaguar Land Rover sales in September jumped 28 percent from a year earlier. 

  • GAIL India Ltd. climbed the most on the Sensex this week with a 11 percent advance. 

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