Most Indian stocks declined, with below-average trading volumes, before the nation’s parliament reconvenes for a winter session that will provide a test of the government’s economic reform agenda.
About three stocks dropped for every two that rose on the BSE India Sensitive Index (SENSEX), which fell 0.1 percent to 18,329.32 at the close. Volumes in the 50-stock S&P CNX Nifty (NIFTY) Index were 7 percent below the 30-day average, data compiled by Bloomberg show. Infosys Ltd. (INFY:US), the second-largest software exporter, slid for the first time in three days. Reliance Industries Ltd. (RIL), the owner of world’s largest oil-refining complex, retreated to a 11-week low. The Sensex lost 2 percent last week.
Prime Minister Manmohan Singh’s Congress party needs to rally its ruling coalition when parliament convenes from Nov. 22 to Dec. 20 and secure support from parties outside of the grouping to push through measures to enable greater foreign investment. The government is reaching out to parties to secure backing, Finance Minister Palaniappan Chidambaram said Nov. 16.
“If we don’t see too much of movement in reforms, there is scope for disappointment in the markets,” Sanjeev Prasad, senior executive director and co-head of Kotak Institutional Equities, told Bloomberg TV India today. “It is not a cheap market. Good quality companies are trading very expensive.”
The Sensex has advanced 19 percent this year, driven by foreign flows and policy steps. The gauge, the best performer this year among benchmark measures in nations with at least $1 trillion in value, trades at 15 times estimated earnings, data compiled by Bloomberg show. The MSCI Emerging Markets Index trades at a multiple of 11.3. Foreigners have bought a net $19 billion of shares this year, the most among 10 Asian markets tracked by Bloomberg, excluding China, the data show.
Infosys fell 1.4 percent to 2,324.75 rupees. Reliance slid 1.2 percent to 765.35 rupees, the lowest close since Sept. 3. ITC Ltd. (ITC), Asia’s second-biggest tobacco company, dropped 0.4 percent to 280.55 rupees. Housing Development Finance Corp. (HDFC), the largest mortgage lender, surged 2.3 percent to 782.05 rupees, the steepest gain since Sept. 21. Tata Motors Ltd. (TTMT), the owner of Jaguar and Land Rover, gained 0.8 percent to 266.10 rupees, the most since Nov. 8.
The S&P CNX Nifty Index closed little changed at 5,571.55, with 31 of 50 stocks on the measure declining. India VIX, which gauges the cost of protection against losses in the Nifty, fell 5.2 percent to 15.81, the first decline in seven days.
Failure to win lawmakers’ support could extend 24 months of policy paralysis that have contributed to growth slowing to near a three-year low and threaten to undermine the government ahead of elections due by May 2014. The nation’s gross domestic product will increase 5.8 percent in the year through March 31, the central bank said on Oct. 30, the slowest pace since 2003.
The Trinamool Congress party, a former Singh ally, plans to push for a vote of no-confidence in the government over its move to allow foreign supermarket chains to hold a majority stake in retail outlets. The main opposition Bharatiya Janata Party is planning a nationwide protest tomorrow, targeting the administration over rising prices, graft and the retail plan.
“It will be difficult for the government to aggressively push reforms amidst the increased opposition,” A.K. Prabhakar, senior vice president at Anand Rathi Financial Services Ltd. in Mumbai, said by phone.
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