India Stocks Drop as Sensex Extends Retreat From Record High

Indian stocks advanced, with the S&P BSE Sensex approaching the 50,000 mark again.

The Sensex climbed 0.2% to 49,584.16 in Mumbai, after dipping as much as 0.6%. The measure has been setting record highs in the last few weeks. The NSE Nifty 50 Index rose by the same magnitude.

“The speed of the rise has been too fast and with minimal corrections on the way,” said Deepak Jasani, head of retail research at HDFC Securities Ltd. in Mumbai, “Also, hopes of the economy and corporate earnings turning around have supported the rise, but India and its corporates have been known to disappoint on both counts.”

Overly optimistic earnings estimates and a reduction in liquidity pose the biggest threats to the scorching pace of gains, strategists from Nomura Holdings Inc. to Kotak Mahindra Asset Management Co. warned. The S&P BSE Sensex Index has risen for 10 straight weeks -- its longest winning streak since 2009.

Infosys Ltd. was the biggest drag on the broader Nifty index, falling 1.2%, as investors took profit after the IT company posted better-than-expected quarterly earnings.

The yield on the benchmark 10-year government bond decreased by two basis points to 5.89%, while the rupee strengthened 0.1% to 73.0462 against the U.S. dollar.

The Numbers

  • Ten of 19 sector sub-indexes compiled by BSE Ltd. advanced, with a gauge of capital-goods companies rising the most
  • Half the shares on the Sensex index rose
    • Reliance Industries Ltd. contributed most to the advance with a 1% gain

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