Mumbai: The country’s stocks sank for a fourth day, with the benchmark index completing its worst month since 2008, amid concern rising raw-material prices will pare the nation’s corporate earnings.
Colgate-Palmolive (India) Ltd declined after higher costs contributed to a 43% slide in profit. Jaiprakash Associates Ltd, a builder of dams, dropped the most in the main stock gauge, retreating to its lowest level since April 2009.
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The stocks have fallen each day since central bank governor D. Subbarao on 25 January increased interest rates for the seventh time since March to combat accelerating inflation.
Housing Development Finance Corp. Ltd, the biggest mortgage lender, fell to its lowest since September.
“There’s a crisis of confidence among investors,” Kislay Kanth, head of research at Mape Securities, said by phone in Mumbai. “Growth forecasts for companies will be cut as costs are rising.”
The Bombay Stock Exchange’s sensitive index, or Sensex, lost 68.21, or 0.4%, to 18,327.76. The index dropped 11% this month, its worst since the 24% tumble in October 2008. The gauge, the world’s worst performer this year after Egypt, is at its lowest level since September. It has lost 13% from a 5 November record, exceeding the 10% slump that signifies a so- called correction to some investors. Global funds sold a net Rs1,397 crore ($304 million) of Indian equities on 27 January, according to data on the website of the Securities and Exchange Board of India. Overseas investors have sold $1.1 billion more of the shares than they have bought this month, heading for the first monthly outflow since May.
Companies on the Sensex are valued at an average 17.3 times estimated earnings, down from last year’s high of 21.5 times in March, according to data compiled by Bloomberg. The S&P CNX Nifty Index on the National Stock Exchange dropped 0.1% to 5,505.90. The BSE 200 Index retreated 0.1% to 2,270.22.
Colgate, a maker of soaps and toothpaste, fell 2.8% to Rs824.5, its lowest close since 26 November. Third-quarter profit declined for the first time in more than four years to Rs662 crore as costs increased by 25%, according to its statement to the stock exchange.
Jaiprakash Associates dropped 4.9% to Rs83.15. Housing Development lost 2.6% to Rs628.35. The Reserve Bank of India on 25 January raised the benchmark interest rate to a two-year high and increased its wholesale price inflation forecast to 7% by 31 March from an earlier prediction of 5.5%.
Sun Pharmaceutical Industries Ltd decreased 1.8% to Rs440.85. The most valuable drug maker reported a third- quarter profit of Rs350 crore, short of analyst estimates of Rs448 crore.
ITC Ltd, the biggest cigarette company, fell 3.3% to Rs162.60. Bharti Airtel Ltd, the largest cellphone operator, sank 2.5% to Rs319.
Graphic by Naveen Kumar/Mint