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India’s (SENSEX) benchmark stock index held around the year’s lowest level before the federal budget later this week. Software exporters advanced as Reliance Industries (RIL) Ltd. and Oil & Natural Gas Corp. declined.
The 30-stock S&P BSE Sensex index increased less than 0.1 percent to 19,331.69 at the close in Mumbai. The measure last week closed at its lowest since Dec. 24, capping four straight weeks of losses. Tata Consultancy Services Ltd. (TCS) and Infosys Ltd. (INFO), the biggest software makers, added more than 1 percent. Reliance Industries, owner of the world’s largest refining complex, lost 1 percent. Oil & Natural Gas tumbled 1.9 percent.
Foreigners have bought a net $8.2 billion of local shares since Jan. 1, adding to last year’s purchases of $24.5 billion, even as the statistics office on Feb. 7 said economic expansion this year will be the weakest in a decade and data on Feb. 12 showed factory output fell for a second month in December. The Sensex has lost 0.5 percent this year, the worst-performing benchmark gauge in Asia after Malaysia.
“The market looks a bit tired at the moment, perhaps it is waiting for the budget,” Tarun Kataria, chief executive officer at Religare Capital Markets, said on Bloomberg TV India today. “The trajectory should continue to be higher because there’s a lot of money out there.” The Sensex may reach 23,000 by the year-end “on inflows, not fundamentals,” he said.
Finance Minister Palaniappan Chidambaram, due to present the budget on Feb. 28, is under pressure to limit spending and keep his pledge to cut the deficit to 3 percent of GDP in four years, from a targeted 5.3 percent for the fiscal year ending March. The economy will grow 5 percent this year, the least since the 4 percent gain in the 2002 to 2003 period, according to the statistics office.
Infosys jumped 2.7 percent to 2,917.8 rupees, extending this year’s rally to 26 percent, the most among the 30 Sensex companies. Larger rival Tata Consultancy added 1.3 percent to 1,473.7 rupees, a record. Wipro Ltd. (WPRO), the third-biggest, rose 0.7 percent to 419.1 rupees.
Reliance Industries lost 1 percent to 854.35 rupees. Oil & Natural Gas tumbled 1.9 percent to 317.9 rupees, paring this year’s advance to 19 percent.
The Sensex has fallen 3.8 percent from a two-year high reached on Jan. 25 as profits from State Bank of India to Tata Motors Ltd. missed estimates and as local mutual funds saw net outflows for the eighth month in January, data and the industry trade body show. Profits at 43 percent of the Sensex companies trailed estimates in the three months through Dec. 31, compared with 40 percent in the previous two quarters, data compiled by Bloomberg show.
“The market has been driven by foreigners and domestic investors have been using the rally to sell, and unless there is something very investor-friendly in the budget we are likely to continue the same way,” Sajiv Dhawan, managing director of brokerage JV Capital Services, told Bloomberg TV India today. “It really depends on what the finance minister says.”
The Sensex index trades at 13.7 times projected 12-month profits, compared with 10.2 times for the MSCI Emerging Markets Index, data compiled by Bloomberg show. Volumes on the Sensex were 20 percent less than the 30-day average at the close. The CNX Nifty (NIFTY) Index of the National Stock Exchange of India added less than 0.1 percent to 5,854.75. India VIX, which measures the cost of protection against declines in the Nifty, fell 0.4 percent to 16.73.
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