Nov. 18 (Bloomberg) -- Indian stocks posted their biggest weekly decline in three months as the rupee weakened, raising the cost of importing raw materials, and on concern Europe’s debt crisis is deepening.
Tata Motors Ltd., the biggest truckmaker and owner of Jaguar Land Rover, slid to a five-week low. Bharat Heavy Electricals Ltd., the largest power-equipment maker, sank to its lowest price since March 2009.
The BSE India Sensitive Index, or Sensex, fell 0.6 percent to 16,371.51 at the 3:30 p.m. close in Mumbai. The gauge slid 4.8 percent this week, the most since the period ended Aug. 5. The measure has slumped 20 percent this year, the most among major Asian indexes, after the central bank’s record increases in borrowing costs combined with Europe’s debt crisis to cool consumer demand and pare earnings growth.
“The domestic macro economic situation has worsened in the last two months; growth in India is slowing down much more than anticipated,” Prasun Gajri, who manages $5.3 billion as chief investment officer at HDFC Standard Life Insurance Co., said in an interview to Bloomberg-UTV. “The situation in Europe is far from normal and things will take time settling down. Attempts made to calm down the situation there have been shortlived.”
The Reserve Bank of India last month forecast the $1.7 trillion economy will expand 7.6 percent in the year to March 31, lower than the 8 percent it estimated previously. It has raised borrowing costs 13 times since mid-March 2010 to tame inflation that has exceeded 9 percent since November last year.
India’s rupee fell past 51 per dollar for the first time since March 2009, taking its year-to-date loss to 12.9 percent, raising the cost of imports and stoking inflation. The country purchases more than 75 percent of its energy needs from abroad, and imports materials including steel, coal and natural rubber.
“The currency movement has taken us by surprise,” said Gajri. “If the currency would not have moved the way it has, inflation would have been less of a problem.”
Asian stocks fell, dragging the MSCI Asia Pacific Index to a six-week low, on concern about bad loans in China’s property sector and growing evidence that Europe’s crisis is infecting major economies. The gauge has fallen 17 percent this year.
The S&P CNX Nifty Index on the National Stock Exchange of India lost 0.6 percent to 4,905.8. The BSE 200 Index declined 2.3 percent this week, the lowest level in more than a month.
Tata Motors sank 2.8 percent to 170.3 rupees, its lowest level since Oct. 7. The stock has fallen 35 percent this year, the worst-performing auto company on the Sensex. Bharat Heavy lost 3.5 percent to 274.85 rupees, extending this week’s slide to 15 percent, the most since the period ended April 4, 2008.
This year’s plunge in the Sensex has narrowed the gauge’s valuation to 14.2 times estimated profits from 21.5 times in March 2010. The MSCI Emerging Markets Index trades at 10.1 times, according to Bloomberg data. Twelve out of 30, or 40 percent, of Sensex companies reported earnings that trailed estimates in the September quarter, compared with 47 percent in the June quarter and 33 percent in March, Bloomberg data show.
“The lag impact of inflation and interest rates can have a significant impact on the numbers in the next fiscal year” ending March 31, 2013, Sadanand Shetty, a senior fund manager at Taurus Asset Management Co. in Mumbai, told Bloomberg UTV. “There could be a scenario when you have to cut earnings or the economic growth rate. Valuations will have to be realigned if the country grows at sub-7 percent. That’s where the overall market is fearful.” Taurus has about $1 billion in assets.
Tata Steel Ltd., the biggest producer of the alloy, shed 2.2 percent to 391.4 rupees. Tata Consultancy Services Ltd., the largest software exporter, decreased 2.6 percent to 1,086.6 rupees, extending its declined this week to 3.9 percent.
Pantaloon Retail India Ltd., the largest retailer, jumped 9 percent to 198.4 rupees, extending its three-day gain to 30 percent. India’s government may consider a proposal next week to allow Wal-Mart Stores Inc., Tesco Plc and Carrefour SA to gain access to the nation’s $396-billion retail market.
The cabinet will discuss a plan to permit foreign companies to own as much as 51 percent of stores that sell more than one brand, said four government officials with direct knowledge of the matter.
JSW Steel Ltd., the third-largest producer, sank 6 percent to 610.75 rupees, and Adani Enterprises Ltd. slid 4.6 percent to 335.4 rupees after the nation’s top court said a panel will investigate their role illegal mining in the southern state of Karnataka, a three-judge panel headed by Chief Justice S.H. Kapadia said today.
Overseas investors sold a net 1.61 billion rupees ($32 million) of Indian stocks yesterday, paring their investment in the equities this year to 27.4 billion rupees, according to data from the market regulator.
Foreign funds, who withdrew $2.4 billion in August, the most since October 2008, were net buyers for 12 sessions through Nov. 14, matching the longest such streak in four months, the data show.
--With assistance from Santanu Chakraborty in Mumbai. Editor: Ravil Shirodkar
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