Sensex Drops From 3-Week High as Telecom Firms Fall on Jio Offer

  • Bharti Airtel, Idea slide as Reliance Jio Extends Free Service
  • Hindustan Petroleum tumbles; Oil & Natural Gas, GAIL advance

Indian stocks dropped, led by telecom companies and power utilities, as some investors deemed the benchmark gauge’s four-day climb to be excessive amid persistent outflows from overseas investors.

Bharti Airtel Ltd., the largest mobile-phone company, dropped the most in two weeks, while rivals Idea Cellular Ltd. and Reliance Communications Ltd. tumbled at least 5 percent after Reliance Industries Ltd. extended by three months the free services being offered by its Jio telecom unit. Power Grid Corp. slid 4 percent, the worst performer on the S&P BSE Sensex.

IndexChangeSize and Scope
BSE Sensex-0.4%First decline in five days
BSE MidCap-1.2%Biggest drop since Nov. 21
BSE Telecom+0.4%Most in two weeks

Indian stocks rose for four days through Wednesday as emerging markets recovered from a selloff that followed Donald Trump’s shock U.S. election victory. Friday’s U.S. payrolls data and the Reserve Bank of India’s policy review on Dec. 7 are the next focal points for local investors who are still grappling with the government’s currency crackdown even as they wait for capital outflows to abate. Global funds pulled $2.6 billion from domestic shares in November, the most since August 2015.

“Gains will be hard to sustain in a market that’s undergoing short-term pain,” said Rajesh Kothari, managing director at Mumbai-based Alfaccurate Advisors Pvt. “Indian equities will remain volatile as investors await local monetary policy and the Fed rate decision.”

‘Economic Damage’

Indian equities were battered in November, with the Sensex posting its worst month since February, on concern the government’s recall of high-value currency bills will hurt demand in an economy where almost all consumer payments are in cash. Gross domestic product, which grew a slower-than-estimated 7.3 percent in the September quarter, will contract to 6.5 percent over the next three months, according to the median estimate in a Bloomberg survey of 14 economists.

“The true impact of the damage to the economy will only be visible in early fiscal 2018 as there could be a shift in purchases from November and December to January and February,” Govindarajan Chellappa, head of research at Jefferies India Pvt., said in an interview. “At present, the data points are not useful to capture the shift.”

The Sensex trades at 15.6 times 12-month projected earnings, compared with the MSCI Emerging Markets Index’s multiple of 12.1.

  • Bharti Infratel Ltd., a unit of Bharti Airtel that owns telecom towers, rose 3 percent, extending a three-day, 5.6 percent rally. Canada’s Brookfield Asset Management Inc. has entered exclusive talks for a takeover after a bid valuing Bharti Infratel at about $11 billion, people with knowledge of the matter said.
  • Hindustan Construction Co. surged by the daily 20 percent limit, its steepest gain since Aug. 2013. The company said it will receive 20 billion rupees on settling claims with government agencies.
  • Refiner Hindustan Petroleum Corp. tumbled the most in three months, while Bharat Petroleum Corp. dropped to a two-month low after oil prices soared. Oil & Natural Gas Corp., India’s largest producer, rallied to a one-month high. Gail India Ltd., a natural-gas supplier, jumped 3.5 percent to a three-week high.
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