Sensex falls for a third day; auto makers drop

Sensex falls for a third day; auto makers drop

Mumbai: India’s stocks fell for a third day as software exporters dropped amid concerns that a stronger rupee may damp earnings and auto makers declined after Maruti Suzuki India Ltd recalled some cars.

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Tata Consultancy Services Ltd (TCS), the nation’s largest software services company, slid the most in a month. Maruti lost 1.2%, the most in two weeks. The nation’s biggest car maker will recall 13,157 diesel cars with engines made between 13 November and 4 December.

The Bombay Stock Exchange (BSE) sensitive index, or Sensex, lost 21.02 points, or 0.1%, to 19,591.18. Seventeen of the 30 shares on the measure declined and 13 advanced.

The gauge reached a three-month high on 4 April as foreigners returned in March, reversing outflows in January and February. The S&P CNX Nifty on the National Stock Exchange shed 0.1% to 5,885.70. The BSE-200 Index rose 0.1% at 2,424.08.

“We expect the rupee to appreciate further as foreign inflows are expected to rise, and that’s a concern for software companies," said Chokkalingam G., chief investment officer at Centrum Wealth Managers Ltd in Mumbai.

TCS dropped 2% to Rs1,199.40 as the rupee reached the highest level in almost five months on Wednesday. Infosys Technologies Ltd, the second biggest, fell 0.71% to Rs3,247.45, its biggest slide since 18 March. India’s top three software companies have a combined 17% weight in the Sensex. They get more than 75% of their sales from abroad and a stronger rupee can damp repatriated earnings.

Maruti dropped 1.2% to Rs1,279.10, its biggest decline since 21 March. Tata Motors Ltd, the biggest truck maker and owner of Jaguar Land Rover, fell for the first time in four days, losing 0.3% to Rs1,291.60. The BSE Auto Index fell, ending a 12-day rally.

The Maruti recall has put a brake on the rally in auto shares, said Arun Kejriwal, a director at Kejriwal Research and Investment Services Pvt. Ltd in Mumbai.

The Sensex rallied 9.1% in March, the biggest such gain since September. The gauge has still declined 4.5% this year as concerns that rising borrowing costs will crimp economic expansion.

Companies on the benchmark trade at an average 15.5 times estimated earnings, compared with 21.5 times in March 2010, data compiled by Bloomberg show. The MSCI Emerging Markets Index trades at 11.8 times.

Overseas investors bought a net Rs1,560 crore ($352 million) of Indian stocks on 4 April and 5 April, raising total investment in equity this year to Rs3,150 crore, data on the website of the Securities and Exchange Board of India show.