July 1 (Bloomberg) -- India’s benchmark stock index fell, halting a six-day advance, as some investors judged the rally excessive and as the nation’s manufacturing grew at the slowest pace in nine months.
Maruti Suzuki India Ltd., India’s biggest automaker, slid to a one-week low after sales declined for the first time since December 2008 as a strike curbed production. Hindustan Unilever Ltd., India’s biggest home-products maker, lost 2 percent. Reliance Industries Ltd., the most valuable company, lost the most in 10 days. The Purchasing Managers’ Index fell to 55.3 in June from 57.5 in May, HSBC Holdings Plc and Markit Economics said today. A number above 50 indicates expansion.
The Bombay Stock Exchange Sensitive Index, or Sensex, fell 83.07, or 0.4 percent, to 18,762.80 at the 3:30 p.m. close in Mumbai. Still, the gauge, which jumped 7.4 percent in six days before today, rose 2.9 percent this week, the most since the five days ended April 1.
“The concerns on inflation and interest rates are not completely over but the mood has turned positive over the past few days,” said Suhas Samant, a fund manager at Mumbai-based Sharekhan Ltd. “It’s logical that some investors will book profit as the rally has been sharp.” He’s avoiding shares of automakers and sold Tata Steel Ltd., India’s biggest producer, and Bharti Airtel Ltd., the largest mobile-phone operator.
The S&P CNX Nifty Index on the National Stock Exchange lost 0.4 percent to 5,627.20 and its July futures settled at 5,632.85. The BSE 200 Index was unchanged.
Maruti fell 1.4 percent to 1,143.15 rupees, its lowest level since June 24. The carmaker sold 80,298 vehicles in June, compared with 88,091 units a year ago, according to an e-mailed statement today. Local sales dropped 3.8 percent to 70,020 and exports tumbled 33 percent.
Workers ended an 11-day strike at its Manesar plant near New Delhi on June 17 after the company agreed to take back dismissed employees. The strike at the factory, which builds as many as 1,200 cars daily, cost the Indian unit of Suzuki Motor Corp. $9 million a day, Chairman R.C. Bhargava said June 8.
Hindustan Unilever dropped 2 percent to 336.75 rupees, falling from its highest close at least since 1991. Reliance plunged 4.1 percent to 861.95 rupees and its July futures settled at 866.35 rupees.
Oil & Natural Gas Corp., the nation’s largest state-owned oil explorer, climbed 0.8 percent to 276.35 rupees after the government made the recovery of royalty payments a condition for the planned acquisition of a stake by Vedanta Resources Plc in Cairn India Ltd. ONGC currently bears the entire royalty burden from Cairn India’s Rajasthan field.
DLF Ltd., the biggest developer, surged 4.7 percent to 220.3 rupees after the Economic Times newspaper reported the company may sell its stake in special economic zones in Pune and Noida to cut debt. Managing Director T.C. Goyal couldn’t immediately be reached at his office for a comment.
Tata Steel lost 1.3 percent to 602.3 rupees. Bharti Airtel sank 2.9 percent to 383.45 rupees, the most since May 5.
The Sensex has dropped 8.5 percent this year, the worst performer among benchmark indexes in the 20 biggest markets, after the central bank raised rates four times in 2011 to tackle rising consumer and food prices. The $1.4 trillion economy grew 7.8 percent in the three months through March, the weakest pace in five quarters. Sensex companies are valued at 15.2 times estimated earnings, compared with 11.1 for the MSCI Emerging Markets Index.
The Reserve Bank of India Governor Duvvuri Subbarao said June 16 he’s willing to risk a slowdown in growth to restrict inflation running at more than twice the rate in the U.S. and almost four times Germany’s. Price gains are India’s “most significant near-term macroeconomic challenge,” Deputy Governor Subir Gokarn said this week.
India’s $1.4 trillion economy expanded 7.8 percent in the three months through March, the slowest pace in five quarters. Some 33 percent of the companies on the Sensex reported profits that missed analysts’ estimates in the March quarter, compared with less than a quarter that did so last year.
Overseas funds bought a net 7.72 billion rupees ($171.7 million) of Indian stocks on June 29, raising total investment in equities this year to 26.7 billion rupees, according to data on the website of the Securities and Exchange Board of India.
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