BackSensex, Nifty snap six-day advance as Infosys, RIL decline
Indian stocks declined for the first time in seven days, led by software exporters, as some investors judged the longest winning streak since October as excessive
Premium. Photo: Mint
Mumbai: Indian stocks declined for the first time in seven days, led by software exporters, as some investors judged the longest winning streak since October as excessive.
Infosys Ltd slid the most in about two weeks after two of its founders sold shares in the nation’s second-largest technology company. Bharat Heavy Electricals Ltd (Bhel), India’s biggest power-equipment maker, slid to a one-week low. Reliance Industries Ltd (RIL), owner of the world’s largest refining complex, declined the most in a month.
The S&P BSE Sensex retreated 0.7%,or 170.62 points, to 24,623.34 at the close in Mumbai, ending a six-day, 7.8% rally. The gauge had climbed every day after finance minister Arun Jaitley in his 29 February Union budget pledged to further shrink the budget deficit, stoking speculation of an interest-rate cut by the central bank. The rally pushed up the Sensex’s 14-day relative strength index to 62 on Wednesday, approaching the 70 level that signals to some traders a security is overbought.
“The markets are taking a breather after the superb rally," A.K. Prabhakar, head of research at IDBI Capital Capital Market Services Ltd, said in a phone interview. “Some investors are taking some money off the table before the important ECB (European Central Bank) meeting today."
ECB announces its rate decision at 1.45pm Frankfurt time, and president Mario Draghi follows up with a press conference 45 minutes later. All economists in a Bloomberg survey expect a rate cut, and 73% forecast ECB will boost the amount of money put into the financial system through bond purchases. That would add to a wave of monetary stimulus this year that includes a lowering of Chinese lenders’ reserve requirements and Japan’s introduction of a negative interest rate.
Infosys tumbled 3.1%, the most since 29 February, after two of its founders and others sold shares for “personal reasons" and philanthropy.
S. Gopalakrishnan sold 5 million shares in the open market, while S.D. Shibulal and his family members sold 2.5 million shares at an average price of 1,149.45 apiece, helping raise about ₹ 862 crore, they said in a statement. The sale was executed by Citigroup Global Markets India Pvt.
Bhel tumbled 3%. RIL retreated the most since 11 February. Larsen and Toubro Ltd, the most valuable engineering company, dropped 2.2%. The stock has fallen 7% this year.
The Union budget proposals, which include a boost in spending on public and rural welfare projects, and a rebound in global commodity prices have spurred capital inflows. Foreign funds have bought $1.1 billion of Indian shares this month, paring this year’s outflows to $1.8 billion.
The Sensex has declined 5.7% so far this year and is valued at 15.1 times its 12-month projected earnings, higher than its three-year average of 14.7. Bloomberg
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