Mumbai: Indian stocks fell for the third time in four days amid concern below-average monsoon rains may hamper efforts to boost growth and hurt company earnings.
Cigarettes-to-hotels group ITC Ltd dropped 1.65% and Hindustan Unilever Ltd (HUL), a unit of the world’s second-largest consumer goods maker, slid 1.12%. Reliance Industries Ltd (RIL), owner of the world’s largest oil-refining complex, lost 1.87% as Sanford C. Bernstein Ltd downgraded the stock. Tata Motors Ltd, the biggest truck maker, fell 2.03%.
The BSE India Sensitive Index, or Sensex, lost 0.73% to 17,489.14 at the 3.30pm close. Rainfall is 23% below the long-term average this season, the weather office said on Tuesday. Smaller harvests may leave the 742 million people living in villages with less money to spend, dampening demand already dented by a slump in growth to a near-decade low. “The deficit may persist until next week,” L.S. Rathore, director general at the weather office, said on Wednesday.
Indian markets fell on Wednesday, with most major indices losing ground. Mint’s Lisa Pallavi Barbora gives us the lowdown on the day’s action.
“While it is still early days, if deficient monsoon rains drive down rural consumption— one of the very few growth drivers for India—the market could see a correction,” Manishi Raychaudhuri and Gautam Mehta, analysts at BNP Paribas Securities (Asia) Ltd, wrote in a report on Wednesday.
Profits at the 30 Sensex companies may drop 14% to Rs 1,279 per share in the year ending March 2013, the most in three years, estimates compiled by Bloomberg show.
Housing Development Finance Corp. Ltd, the biggest mortgage lender, flagged off the earnings season for the quarter ended June, reporting a profit of Rs 1,002 crore for the period. That compares with a median estimate of Rs 1,010 crore in a Bloomberg survey of 15 analysts. Shares fell 0.62% to Rs 678.30.
Tata Consultancy Services Ltd and Infosys Ltd, two of the nation’s biggest software exporters, are due to announce earnings on Thursday. HDFC Bank Ltd, the second largest private lender, will report on 13 July.
Rainfall has improved countrywide in the past 10 days, agriculture minister Sharad Pawar said on Wednesday.
RIL shed 1.87% to Rs 725.70, its biggest loss in almost three weeks. “Limited earnings growth over the next three years means that share price appreciation will be more limited,” Sanford Bernstein analyst Neil Beveridge wrote in a report on Wednesday, downgrading Reliance shares to market-perform from outperform. ITC lost 1.65% to Rs 253.90, the most since 2 July, and HUL dropped 1.12% to Rs 441.30. Tata Motors retreated 2.03% to Rs 241.40, the most in two weeks, and Maruti Suzuki India Ltd, the country’s largest car maker, slid 1.49% to Rs 1,203.05.
Bharti Airtel Ltd, the largest mobile phone operator, fell 1.87% to Rs 315.45, the lowest in over a month. Wipro Ltd, the third largest software exporter, slumped 2.68% to Rs 374.20, the lowest level since 29 November, while aluminium maker Hindalco Industries Ltd plunged 2.74% to Rs 124.10, the biggest decliner on the Sensex on Wednesday.
India VIX, which measures the cost of protection against losses in the S&P CNX Nifty Index, rose 3.1% to 18.39. The Nifty fell 0.73% to 5,306.30. The BSE-200 Index lost 0.6% to 2,156.54.