Indian Stocks Snap Rally as Earnings, Virus Curb Risk Appetite
All but two of the 19 sector indexes compiled by BSE Ltd. declined, led by a gauge of telecom companies
(Bloomberg) -- India’s stock benchmark declined, snapping a 10-day advance, as investors weighed the quality of local earnings and the re-imposition of lockdowns in some of Europe’s largest cities.
The S&P BSE Sensex fell 2.6% to 39,728.41 at the close in Mumbai after a volatile day of trading, underperforming the broader Asia Pacific region and ending its best run of gains since 2007. The NSE Nifty 50 Index dropped 2.4% after seesawing earlier in the day. Most stocks in Asia declined, with a region-wide gauge losing 1.1%.
Impending restrictions to curb the virus outbreak in London and Paris weighed on sentiment late in the session. “There is a concern among investors that countries will again resort to lockdowns to prevent the spread of the virus” adding to selling pressure, said Kranthi Bathini, an equity strategist at WealthMills Securities Pvt.
Meanwhile, as earnings season gathers pace, two of the three Nifty 50 firms that have reported so far missed analyst estimates for their quarterly results. Infosys Ltd. on Wednesday posted results that beat profit expectations and raised its annual sales forecast.
The market will be “volatile because valuations have moved above long-term average multiples,” Shibani Kurian, head of equity research at Kotak Mahindra Asset Management Co., said in an interview with Bloomberg Television. The Sensex is trading at 21 times estimated earnings, about two standard deviations above its five-year average.
On the macro front, the monthly trade report is due later today. Both the Sensex and Nifty 50 are close to erasing year-to-date losses, supported by inflows of about $1.1 billion into Indian equities from foreign buyers this month.
The yield on the 10-year government bond was little changed at 5.90%. The rupee weakened 0.1% to 73.3800 per dollar.
The Numbers
- All 19 sector indexes compiled by BSE Ltd. declined, led by a gauge of telecom companies
- Asian Paints Ltd. was the only Sensex member to clock gains for the day, rising 0.9%
- Reliance Industries Ltd. weighed the most on the benchmark and dropped 3.5%
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