Mumbai: India’s stocks fell, led by software exporters after Infosys Technologies Ltd’s quarterly profit missed analysts’ estimates as concerns about the global recovery kept clients from boosting orders.
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Infosys, the largest local company to report earnings for the last quarter, lost the most in 20 months. ICICI Bank Ltd declined 4.1%. Food-price increases held close to the highest pace since July, a government report showed on Thursday. The nation should copy China in building stockpiles to cool gains, Adani Enterprises Ltd, India’s biggest farm goods trader, said.
“Investors are not expecting any blockbuster results as Infosys has disappointed,” said Jagannadham Thunuguntla, a New Delhi-based chief strategist at SMC Global Securities Ltd. “Concerns over interest rates and inflation, and the government’s action to control prices, are getting stronger day by day.” SMC Global Securities was ranked by Dun and Bradstreet as the brokerage with the nation’s biggest distribution network.
The Bombay Stock Exchange’s (BSE) sensitive index, or Sensex, lost 351.28, or 1.8%, to 19,182.82 at close. The measure has slid 6.5% this year, the only drop among the world’s 10 largest equity markets. Companies on the gauge are valued at an average 18.1 times estimated earnings, compared with a recent peak of 20.1 times on 5 November.
The S&P CNX Nifty Index on the National Stock Exchange dropped 1.9% to 5,751.90. The BSE 200 Index fell 1.5% to 2,379.47.
Infosys sank 5.1% to Rs3,205.20, its steepest drop since 19 May 2009. Net income rose 14% to Rs1,780 crore ($396 million) in the three months through December from a year earlier, short of the Rs1,820 crore average of 27 analyst estimates compiled by Bloomberg. The weaker economic recovery in developed markets could undermine industry growth, according to a company statement. Infosys gets about 90% of its sales from North America and Europe.
Tata Consultancy Services Ltd, the largest software services exporter, fell 1% to Rs1,124.25, while Wipro Ltd, the No. 3, retreated 3% to Rs453.55.
ICICI, the nation’s second largest bank, lost 4.1% to Rs1,026. State Bank of India, the nation’s biggest, plunged 4.1% to Rs2,560.7.
The wholesale food inflation rate was 16.91% in the week ended 1 January, the commerce ministry said in an e-mailed statement. That compares with an 18.3% increase in the previous week.
The yield on the benchmark nine-year government bond has gained 21 basis points to 8.12% this month on speculation Reserve Bank of India governor D. Subbarao may boost rates for the seventh time in a year at a 25 January policy meeting.
Strategic stockpiling of staples would help cool prices, Atul Chaturvedi, chief executive officer for farm business at Adani, said in an interview.
High food costs for a sustained period will lead to more wage demands, stoking inflation, Chakravarthy Rangarajan, chairman of the Prime Minister’s Economic Advisory Council, said last week as he sought “some action” from the central bank.
Global funds are poised to sell more Indian stocks than they bought this month, the first monthly foreign outflows since May. They disposed of a net Rs1,120 crore of the equities on 11 January, the fifth straight day of withdrawals, according to data on the website of the Securities and Exchange Board of India. That’s the longest string of sales since 13 December.
India’s economic growth and corporate earnings lured foreign investors to buy a record $29.3 billion (Rs1.32 trillion) of local equities last year and made the Sensex the best performer and most expensive among the world’s 10 biggest markets.
Graphic by Paras Jain / Mint